The latest IHS Markit jobs report for July (sponsored by the REC) shows that job vacancies expanded at their quickest rate since last November. Growth was led by the private sector, with demand for both permanent and temporary workers continuing to rise at rates that comfortably outstripped those seen in the public sector.
Permanent placements continued to rise sharply in July, though the rate of expansion was the softest recorded since last October. Temp billings also increased strongly, with the rate of growth picking up from June’s recent low.
Recruitment agencies indicated that candidate shortages weighed on permanent staff appointments. Notably, the supply of both permanent and temporary candidates fell sharply in July, despite rates of decline easing to the weakest in three months in both cases. Low candidate availability and robust demand for staff led to a further steep increase in salaries awarded to permanent starters. At the same time, temp pay rates rose at a marked and accelerated rate that was close to April’s two-year record.
Sophie Wingfield, Head of Policy at REC noted that despite the recent rise in interest rates that employees may be starting to see the benefits of rising salaries: “The rise in interest rates for only the second time in a decade may leave some people feeling the pinch. But a new job is one way people can ease the burden on their finances. With our data showing starting salaries continuing to rise, the latest official government figures suggest that we are finally seeing the effects of a tighter labour market feed through to pay.”
Demand for qualified accountants to work on a contract basis within commerce and industry surged by 44% between November 2016 and November 2017 according to market analysis from specialist recruiter, Global Accounting Network. This reflected a move by organisations to bring on board specialist expertise to arm themselves against future uncertainty, not least Brexit, the report said.
Commenting on this rise of vacancies, Hugh Spurling, Head of Interim Services at Global Accounting Network said:
“2017 saw a strong increase in demand for interim accounting professionals and we expect this trend to continue in 2018. This can largely be attributed to external market conditions, with businesses possibly unwilling to commit to permanent headcount costs against the current landscape and choosing instead to invest in flexible resources, until there is more certainty.”
“The clients we work with continue to seek professionals to oversee transformation programmes and systems implementation, which is positive for market confidence moving into 2018. However, a rise in vacancies for FP&A is indicative of the steps businesses are taking to mitigate against future uncertainty by ensuring that they have the data they need to inform decision making and long term strategies.”
New figures have shown that business investment actually grew in the UK post the Brexit referendum contradicting an initial report.
Revised figures from the Office for National Statistics have altered the picture of the UK economy, lowering figures for economic growth but increasing the estimate of how much households are saving.
According to the changes, business investment — one of the key indicators of companies’ confidence about the future — was higher than previously thought.
The data are particularly sensitive in the wake of last year’s vote to leave the EU. Mark Carney, Governor of the Bank of England, said in August that uncertainty over Brexit was holding back both business investment and household spending.
Business investment rose 2.5% during the second quarter of 2017 compared with the same quarter in the previous year. Earlier estimates found it had not grown at all during the 12-month period. Overall investment spending, known as gross fixed capital formation, was £81.1bn in the second quarter of 2017. Business investment represented £45.7bn of this total. According to the new data, total investment rose 2.4% and business investment increased 2.5% when compared with the second quarter of 2016, after adjusting for price increases.
The data are based on the responses of business to surveys and some companies have been wrongly classifying their investments. Companies had been reporting construction work as capital products.
Correcting this has raised the amount of investment because the different categories require different inflation adjustments. The change in categorisation means that more of the money spent is counted as a real increase in investment rather than an increase in prices.
The change in the rate of investment was not enough to raise overall economic growth. In fact, the ONS lowered growth estimates in the year since the Brexit referendum, because consumer spending had not increased as fast as previously thought. But the data does mean that it is not correct to talk about business investment falling or stagnating, even if investment is continuing to underperform.
UK jobs market remains strong in August – REC
The latest REC Jobs Report (produced by IHS Markit) shows the UK Labour market remained buoyant in August with the number of people placed into permanent job roles continuing to rise sharply.
The rate of growth did ease slightly from July’s record level but temp billings remained strong, with the rate of expansion unchanged from July’s 29-month high.
August’s data pointed to a further steep increase in staff vacancies. Furthermore, growth of demand for staff reached its highest since April 2015. Growth of permanent starting salaries accelerated for the fourth month running in August. Notably, it was the quickest rate of pay inflation seen since October 2015. Temp pay also increased at a faster pace, rising at the steepest rate for 16 months in August.
The availability of candidates to fulfil permanent job roles continued to decline sharply in August, with the rate of deterioration slightly quicker than seen in July. Temp staff supply meanwhile fell to the greatest extent in 20 months.
Commenting on the latest survey results, Kevin Green, REC Chief Executive says: “As this month’s report clearly shows, employers are increasingly turning to recruitment agencies as it becomes harder to find the people to fill the jobs available. There are two trends at play. Businesses are seeking more professional and managerial capability, so we’re seeing high demand for roles like financial directors, analysts, and compliance and HR professionals. Meanwhile, there is a significant shortage of people to fill blue collar roles such as drivers, electricians, and construction workers, and this is being exacerbated by a fall in net migration from the EU.
“In many areas of the jobs market candidate supply cannot meet demand. Employers are having to offer more money to secure the people with the skills they need. While the working population in general has experienced a pay squeeze, there are clearly opportunities now to earn more by moving jobs.
“This is good news for individuals, but businesses will be concerned about the sustainability of this trend. Businesses can only grow if they have access to the people and skills they need. It is essential that the government recognises this by developing an evidence-based immigration system that will support the economy.”
The latest REC/IHS Markit Jobs report shows a sharp and accelerated increase in permanent staff placements across the UK. May’s report shows the rate of expansion at a 25 month high while temp billings also rose at a steeper pace recording the strongest rate of growth since March 2015.
The number of staff vacancies rose sharply for both permanent and temporary roles in the UK during May. Notably the index measuring total growth of demand for staff reached a 21 month peak in the latest survey period. However, the availability of staff to fill vacancies continued to decline during May. While the number of candidates for permanent roles dropped at the quickest pace since August 2015, the deterioration in temporary candidate availability softened slightly since April.
This balance of supply and demand has led to average starting salaries for people placed into permanent jobs increasing at their quickest rate in the three months during May. Hourly rates of pay for temporary/contract staff also rose sharply, despite the rate of growth softening since April.
Commenting on the latest survey results, Tom Hadley, REC Director of Policy says:
“The challenges facing the next government are stark. Demand for staff is the strongest in almost two years, but the number of people available to take those jobs has plummeted. Official data shows unemployment has dropped to the lowest level since 1975, and EU citizens are leaving the UK in droves. Employers seeking to fill vacancies are running out of options.”
“Whichever party forms the next government must focus on improving the employability of our young people and boosting inclusion for underrepresented groups. Alongside this, these figures clearly show that in many sectors we need more, not fewer people so that businesses can grow and public services continue to deliver.”
The latest jobs data from the Office for National Statistics (ONS) shows that the UK unemployment rate has fallen to 4.6%, its lowest in 42 years.
The number of people unemployed fell by 53,000 to 1.54m in the three months to March, the ONS said, while average weekly earnings excluding bonuses increased by 2.1%. On Tuesday, figures showed inflation hit 2.7% in April, up from 2.3%, its highest since September 2013. The jobless rate has not been lower since the June to August period of 1975. The employment rate, the proportion of 16 to 64 year olds in work, was 74.8%, the highest since records began in 1971.
“Theresa May will be pleased to see unemployment drop to its lowest rate since 1975, which echoes her rallying calls for ‘strength and stability’ during the unpredictable economic climate that comes with Brexit negotiations,” said Dennis de Jong, managing director at UFX.com.
“However, alarm bells will be ringing for Britons with wages continuing to fall. This could cause a headache for the government over the standard of living in post-Brexit Britain in the run up to next month’s general election,” he added.
Between January and March, the number of 16 to 64 year old women in jobs was 70.2%, also the highest rate since records began. Meanwhile 79.5% of 16 to 64 year old men were in work, the highest since 1991. The ONS attributed the rise in the rate of women’s employment, in part, to changes to the State Pension age for women, which has meant fewer women retiring between 60 and 65.
The unemployment rate among 16 to 24 year olds was 12.5%, down from 13.7% in January to March of last year. “The unemployment rate for those aged from 16 to 24 has been consistently higher than that for older age groups,” said the ONS.
The number of UK nationals working in the UK increased by 179,000 compared with January to March of last year to stand at 28.31m. The number of non-UK nationals working in the UK increased by 207,000 to a record 3.55m, meaning 11.1% of all people working in the UK are non-UK nationals.
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.”