Britain's workforce is shrinking at the quickest rate since lockdown due to rising wage bills.
Wages rose at the highest rate on record in the three months ending in July at 8.5%.
It means that companies are not replacing staff who leave them, as headcounts reduce at the fastest rate since January, 2021, according to the S&P Global purchasing managers’ index (PMI).
Businesses in the service sector, which makes up the bulk of the economy and ranges from waitering jobs to banking jobs, are driving the reduction in the size of the country’s payroll.
Inflation forcing employers to increase wages
Speaking to the Telegraph, Tim Moore, from S&P, said: “Some firms noted that strong wage pressures had led to the non-replacement of voluntary leavers.”
Mr Moore added that while demand for services slows, companies reacted to lower volumes of work and declining backlogs by “putting the brakes on hiring plans in September”.
A slowing economy is making it harder for companies to pass on the cost of higher wages to customers through higher prices.
Mr Moore said: “There were reports that higher fuel prices and wage bills had pushed up prices charged across the service economy, but service firms often suggested that competitive pressures had eroded pricing power.”