The latest estimate from the Office for National Statistics (ONS) shows that the UK economy grew by more than previously reported in the final three months of 2016.
Gross Domestic Product (GDP) increased by 0.7%, up from 0.6%, with the upward revision mainly reflecting a better than expected performance in the manufacturing industry. However, the ONS did cut its estimate for growth in 2016 as a whole to 1.8%, down from the 2% it forecast last month.
This downward revision pushes UK slightly below Germany, with an estimate of 1.9%, in the G7 growth league, said John Hawksworth, chief economist at PwC, “though the difference is well within the margin of error on any such early GDP estimates.”
The downward revision appeared to have been prompted by weaker North Sea oil and gas production during the first six months of 2016, and did not reflect the underlying strength of the UK economy, he added.
“Excluding oil and gas output, estimated UK GDP growth might actually have been revised up in 2016,” added Mr Hawksworth.
The ONS also said there had been a slowdown in business investment, which fell by 1% compared with the three months to the end of September. It attributes that to “subdued growth” in investment in information and communications technology equipment, as well as “other machinery and equipment”.
However, the dominant services sector continued to grow steadily, “due in part to continued growth in consumer spending, although retail showed some signs of weakness in the last couple of months of 2016, which has continued into January 2017,” according to ONS head of GDP Darren Morgan.
“UK GDP may have gained some momentum into the end of 2016, but recent news from UK seems to have shown that that momentum has been lost in the early weeks of 2017,” said Jeremy Cook, chief economist at the international payments company, World First.
“Services growth is set to slow, buffeted by rising inflation and slowing real wage gains and a consumer that is not waving but drowning.”
Employment growth continues in three months to July – ONS
The latest employment figures show another healthy increase in the number of people in work. The Office for National Statistics reported that employment rose by 174,000 in the three months to July, with the unemployment rate unchanged at 4.9%.
The claimant count, which is calculated for August, found there were 771,000 people claiming unemployment related benefits, up from 763,600 in July.
Wage growth did slow down with the ONS reporting a fall to 2.1% in the three months to July, from a revised 2.4% a month ago. When bonuses are added to the wage total, earnings rose by 2.3% during the quarter, down from 2.5%.
Economists had differing views as to the impact of Brexit on the jobs outlook. James Knightley, UK economist at ING Financial Markets, was more cautious saying “the employment figures have held up well despite Brexit because the data is a rolling three-month figure. It includes numbers for May and June, ahead of the referendum, which most corporates expected to result in the UK staying in the European Union. We have to remember that it also takes time for businesses to react to shock outcomes like the Brexit vote.”
Alan Clarke, an economist at Scotia Bank, was more upbeat, arguing that the broader recovery in the economy bode well for the labour market. “It is business as usual after the referendum. Firms have not stopped hiring. Blaming the slower wage numbers on Brexit is putting the cart before the horse because the wage data lags [other measures of the economy’s health] by a considerable margin,” he said.
Average regular pay (excluding bonuses) was £472 per week, up from £463 per week a year earlier. Analysts said the decline in wages growth was likely to further delay any increase in interest rates, though in the short term the stability of the labour market would mean policymakers were under little pressure to cut further.
The latest REC/IHS Markit Report on Jobs has some encouraging news for recruiters and the economy as a whole The latest data showed a rise in the volume of permanent staff placements during August, following decreases in the preceding two months following the Brexit vote. Anecdotal evidence suggested that some panellists had decided to move ahead with hires that had previously been placed on hold.
Temp billings also rose at their strongest rate since May having eased to a ten-month low in July. Panellists indicated that strong client activity levels had underpinned the latest increase. Starting salaries for successful permanent candidates continued to rise in August. The rate of growth was solid and faster than in July, with panellists citing skill shortages and greater numbers of senior-level placements. However the supply of candidates to fill vacancies remained an issue in August, with consultants signalling sharper falls in both permanent and temporary staff availability.
Commenting on the latest survey results, REC chief executive Kevin Green says:
“The UK jobs market returned to pre-referendum patterns in August as the initial shock of the vote result subsided. Permanent hiring returned to growth as employers confirmed appointments that had been on hold or delayed in June and July. Starting salaries also improved, with employers having to offer more to attract candidates who might be reluctant to move jobs in the current climate.
“Despite this month’s positive data, it is still too early to make conclusions about what impact the vote to leave the EU will have on the jobs market. For example, the fact that vacancy growth has softened is concerning, suggesting that hiring could be volatile over the coming months.
“The priority now is to shore up business confidence. Much of this depends on progress the government can make in its difficult task of ensuring that UK businesses have the ability to trade with their neighbours in the EU. Developing an immigration policy which will allow employers to access enough candidates for the jobs available is vital. Employers from the public sector to agriculture and engineering to construction could be adversely affected if access to workers from outside the UK is limited.”
The Report on Jobs is a monthly publication produced by IHS Markit and sponsored by the Recruitment and Employment Confederation.
The UK’s services industry rebounded strongly in August, suggesting the country will avoid recession, according to a report from Markit/CIPS.
The Purchasing Managers’ Index (PMI) showed that activity in UK services recorded the biggest month-on-month rise in the survey’s history rising from 47.4 in July to 52.9 in August. A score above 50 indicates growth. Markit said this effectively takes services back to pre-referendum levels.
The PMI is a survey of business managers, gauging whether their firm’s activity has increased compared with the previous month. The return to growth for the services industry – which accounts for nearly 80% of the UK economy – adds to signs of recovery in manufacturing and construction last month.
There had been fears of two consecutive quarters of falls in economic growth – the usual definition of a recession – but Chris Williamson, chief economist at Markit, said the survey findings suggested there would be a modest 0.1% expansion in GDP in the three months to September.
Last month’s recovery in services wiped out a shock fall in July following the Brexit vote. “A record rise in the services PMI adds to the encouraging news seen in the manufacturing and construction sectors in August to suggest that an imminent recession will be avoided,” Mr Williamson said.
It is still too early to call the “start of a sustained post-shock recovery, but there’s plenty of anecdotal evidence to indicate that the initial shock of the June vote has begun to dissipate”, he said.
He added: “Many companies are seeing business return to normal either simply by customer confidence rising or a stoic determination to ‘Buck Brexit’ and carry on regardless.”
New data from the Association of Professional Staffing Companies (APSCo) shows that professional recruitment firms now have 1% more vacancies on their books than this time last year.
This is in line with the latest data from the Office for National Statistics (ONS), which reveals that overall employment levels increased modestly by 44,000 in the three months to March 2016, representing an employment rate of 74.2%.
The latest data from APSCo reveals that vacancies within the finance and accounting sectors continue to climb rapidly despite uncertainty surrounding the upcoming EU referendum, increasing by 10.2% year on year. This is in line with the latest data from specialist recruiter, Morgan McKinley, which found that available jobs in the City increased by 11% month-on-month to April.
In contrast, APSCo’s data found that engineering vacancies have dipped by 14% year-on-year. This comes at a time of huge uncertainty for the sector as the Institution of Engineering and Technology (IET) warns of the potential ramifications if the UK were to leave the EU. The future of the British steel industry – and the associated impact on jobs – is also currently in limbo as Tata Steel considers investment partnership bids.
APSCo’s figures also reveal that median salaries across all professional sectors dipped by 0.1% month-on-month following a sustained period of growth. This figure is characterised by notable fluctuations in terms of sector, with education, for example, recording an uplift of 11.2% while salaries within property and housing fell by 2%. Year-on-year, professional salaries rose by 3.4% across the board which exceeds the national increase in salaries as reported by the ONS which found that average earnings grew at an annual rate of 2% in the three months to March 2016.
Temporary and contract vacancies have increased across the professional staffing market with opportunities up by 1% year-on-year. Demand within finance and accounting was particularly strong, with vacancies increasing by 29%. This can most likely be attributed to increases in workload in the run up to the 2015/16 financial year-end.
Online jobs site CV-Library has reported that the UK labour market experienced 15.1% growth in job vacancies in Q1 2016, compared to Q1 2015, despite economic concerns surrounding the EU referendum, a wavering steel industry and a weakened sterling.
Further confirming the strength of the labour market, job growth can be seen in a number of key sectors and across the UK, suggesting growth is not limited to one region or industry. Arts and graphic design, social care, education and legal saw the strongest growth by sector, while Liverpool, Edinburgh and Cardiff were the best performing cities.
Furthermore, the job site reported an increase in job applications with each vacancy now receiving over 19 applications as rates increased by 16.4% year-on-year. This means application growth is now outpacing job growth – good news for employers currently grappling with skills shortages, who now have more candidates to choose from during the recruitment process.
“The recruitment industry is often the first to feel the effects of economic fallout, so it’s reassuring to see the labour market remain strong during a shaky economic climate. Employers are left with many unanswered questions about how a Brexit would impact the labour market, and what the government will do to support struggling sectors; yet job growth is steady, suggesting that UK businesses are in a strong position and continue to create jobs for the UK economy,” Lee Biggins, founder and managing director of CV-Library said.
The report also showed that in Q1 2016 there was 3.9% growth in advertised salaries when compared with the same period in 2015; meaning the average wage has jumped from £31,710 to £32,938.
Britain’s manufacturers are struggling to recruit skilled workers and keep pace with global technology, according to an industry report.
Three-quarters of companies say they have faced difficulties finding the right workers in the last three years, according to business group EEF. It warns a skills shortage is putting productivity growth at risk and adding to pressure on manufacturers as they battle a host of pressures in domestic and overseas markets.
The report comes just weeks after the Office for Budget Responsibility (OBR) cut its forecast for potential productivity, or what workers in the UK can produce an hour, triggering warnings of damage to living standards, wages and government tax receipts.
The EEF says the struggle to find the right people with the right skills is compounding those problems. It predicts demand for skills will rocket and urges the government to launch grants for apprenticeships and reform the education system to ensure leavers’ skills match needs of businesses.
Technology is manufacturing globally, with increasing automation of production in sectors such as car-making. In turn, that has increased demand for new skills such as programmers for robots. In the wider economy there have been warnings of large-scale job losses from the so-called fourth industrial revolution. The World Economic Forum has predicted more than 7m jobs are at risk in the world’s largest economies over the next five years as technological advances in fields such as robotics and 3D printing transform the world of work.
The EEF claims that ministers are not matching industry’s efforts to tackle a skills crunch, such as in-house training programmes and competitive pay packages. “We still struggle to find a sufficient number of candidates to satisfy the demands of our sector, and too many candidates lack the skills that manufacturers need,” said EEF’s chief executive, Terry Scuoler. “Had manufacturers not already been taking action, we would arguably now be over the cliff-edge, not just approaching it.”
Two-thirds of manufacturers cited a lack of technical skills among applicants and almost as many, 64%, said there was an insufficient number of candidates, according to the EEF’s survey of 239 companies.
The group also highlights government figures showing that the proportion of hard-to-fill vacancies in manufacturing remained at 35% in 2015 – unchanged from 2013 and worse than in 2011 when it was at 30%. Those figures from the UK Commission for Employment and Skills put hard-to-fill vacancies for all sectors in the UK together at 33%.
The EEF predicts recruitment difficulties will intensify given manufacturers expect their demand for skilled workers to rise over the next three years. Almost six in 10 (59%) expect to need more production-related technical skills and almost half expect to need more staff with IT skills, according to the skills report.
Overall, 72% of companies said they were worried about acquiring the skills their business will need in the next three years. Companies in the survey said they were offering training and flexible working to help, with eight in 10 planning to recruit manufacturing and engineering apprentices in the next 12 months.
The EEF used its report to renew its complaints over the cost to employers from a new national living wage coming in this week and an anticipated apprenticeship levy due to start next year. It also demanded more help on skills from the government, which has pledged a “march of the makers” and less reliance on consumer spending to fuel economic growth.
Responding to the report, the Department for Business, Innovation and Skills (BIS) said the government was working closely with manufacturers to raise productivity and had already cut red tape and invested £6.9bn in the UK’s research infrastructure.
New figures show more people are in work in the UK than ever before. The growth has been driven by an increase in full-time work which now stands at 31.42m – up nearly 0.5m from a year before.
The UK’s employment rate is 74.1%, the highest since comparable records began in 1971, and wages (before bonuses) have risen 2.2% compared with last year, while inflation was close to flat. Private sector employment, meanwhile, is the highest on record at 26.1m with 2.8m more people working in the private sector since 2010.
The unemployment rate still stands at 5.1%, the lowest in a decade, and the number of people claiming unemployment benefits has fallen to its lowest level since 1975.
Employment Minister Priti Patel said: “This is another strong set of figures showing private sector employment at the highest since records began, wages rising and a near record number of job vacancies available in the UK economy. “
The latest labour market statistics, released by the ONS, also showed that the female employment rate is at a record high of 69.1%, with a million more women in work since 2010, the number of young people claiming unemployment benefits is at it lowest since the mid-1970s and the number of people not in employment and not looking or not available to work – is at a near record low.
The latest REC Jobs Report (compiled by Markit) shows that the UK labour remains healthy despite a number of headwinds on the horizon.
February’s data pointed to a further increase in permanent staff placements with the rate of expansion at a 3-month high. Temp billings rose at the same pace as in January. The level of available job vacancies continued to rise in February with the rate of growth marked and the fastest in six months. Demand for permanent staff continued to show a stronger trend than that for temps.
The availability of staff for both permanent and temporary/contract roles continued to fall in February. However, the rate of decline eased in each case to the slowest in at least two years. Starting salaries for successful permanent candidates rose at the fastest pace in three months during February. However, temp pay growth eased, hitting a 33-month low.
Despite the encouraging numbers, REC chief executive, Kevin Green, stressed that there were a number of threats to its continued strength:
“The UK labour market is at a critical juncture. Permanent hiring improved last month, demand for staff remains strong, and pay is going in the right direction – but serious threats are looming just around the corner.
“Next week the Chancellor will announce his plans for the coming financial year, at a time when recruiters across the country are reporting serious skills shortages alongside buoyant jobs growth. Now is not the time to put up additional hurdles that could throw the jobs-rich recovery off course.
“The introduction of the National Living Wage on April 1st, closely followed by tax changes on April 6th, will disrupt hiring strategies for many businesses. Employers will seek to offset rising wage bills, for example by scaling back recruitment and increasing automation. This could weaken future demand for staff.
“In June, the EU referendum carries a very real risk that business confidence will be curtailed and investment in hiring could falter. It’s vital that we have an informed debate about the impact the referendum might have on jobs, both in the short and long term. All parties must remember that UK employers need access to the global labour market in order to thrive.
“Global economic headwinds only add to the uncertainty around what the months ahead hold, and the Recruitment and Employment Confederation calls on the government to avoid further destabilising the UK jobs market in next week’s Budget.”