Private sector staffing numbers dropped at the fastest pace since the global pandemic this month, figures showed on Friday.
According to S&P Global, employment levels fell at the quickest rate since November 2020 in February as employers braced for higher payroll costs and muted demand.
This coincided with a fall in the flash composite purchasing managers index from 50.6 to 50.5 between January and February, signalling slowing output growth.
The services index increased though, while manufacturing output growth was shown to have fallen further into negative territory.
“Business activity remained largely stalled for a fourth successive month, with job losses mounting amid falling sales and rising costs,” S&P economist Chris Williamson said.
“The lack of growth alongside rising price pressures points to a stagflationary environment which will present a growing dilemma for the Bank of England.
“A key factor behind the upturn in inflationary pressures is the growing number of firms reporting the need to raise prices in order to help offset the impending rise in staff costs associated with the National insurance hike and uplift to the minimum wage announced in the autumn Budget.
“However, companies also reported that the Budget changes also played a major role in driving intensifying job cuts.”