The UK is to enjoy decent quarterly GDP growth the CBI has predicted as it upgrades its forecasts for this year and next. The business lobby group now expects growth of 2.6% this year and 2.8% next year, up from its June forecast of 2.4% and 2.5% respectively.
Increased household spending and robust investment growth will drive the improved growth, the CBI believes. The CBI now expects interest rates to rise in the first quarter of next year. In June, it had expected rates to begin rising from their historic low of 0.5% from the start of April next year.
But it now says the improved growth picture alongside more hawkish comments from the Bank of England’s rate-setting Monetary Policy Committee had prompted it to bring its prediction forward.
“We now expect interest rates to rise to 0.75% in the first quarter of 2016, and then rise at a slow pace thereafter,” the CBI said. The CBI said it expected growth until the end of next year to continue at a similar pace to the three months to the end of June, averaging 0.7% a quarter.
Household spending and business investment would remain the two key factors driving growth next year, it added. It said improved productivity had also helped to boost wage growth. This combined with low inflation, largely due to the drop in commodity prices, meant households had more to spend, the CBI said.
But it warned that the outlook on exports was somewhat muted with the strong pound hitting the UK’s competitiveness abroad. And it said Eurozone growth would remain subdued for the foreseeable future.
“Strong domestic demand and upbeat official data since our last forecast has boosted our outlook for 2015. We expect this strength to continue into next year,” said CBI director for economics Rain Newton-Smith.
The latest KPMG REC Report on Jobs shows the number of people placed in permanent jobs by recruitment consultants continued to rise in April. Moreover, the rate of expansion quickened to an eight-month high. This reflected a stronger increase in demand for staff, with permanent vacancies rising at the fastest pace since October 2014.
Agency short-term staff billings also grew in April but the latest increase was the slowest in six months. This corresponded with a moderation in the rate of growth of demand for temporary/contract staff to the least marked since January.
Growth of permanent staff salaries accelerated to a nine-month high in April, with panellists highlighting a combination of strong demand and skill shortages. Hourly rates of pay for temporary/contract staff meanwhile increased at the fastest pace since July 2007.
The availability of staff to fill permanent roles deteriorated further in April, with the rate of contraction accelerating to the sharpest in five months. Temporary/contract staff availability meanwhile declined at a marked pace that was similar to that seen in March
Commenting on the latest survey results, Bernard Brown, Partner and Head of Business Services at KPMG, said:
“There has been a resurgence of recruitment into Britain’s boardrooms, with businesses poaching top talent to drive their companies forward. This surge of executive hires is a strong indication of underlying business sentiment and their ambitions for the future.
“However, while the highest paid are benefiting from the recovery, demand for permanent staff remains more muted in the manufacturing sector. This section of the market is often the first to stall in tough economic conditions and the last to recover, emphasising the divergent fortunes facing job seekers in today’s market.”
A survey by Expectations! Recruitment Services has found that firms that take more than 24 hours to make a decision about interviewees are increasingly losing candidates to other vacancies. Due to the buoyant times and the skills shortage, the availability cycle of a potential recruit has fallen to just 24 hours, rather than the 2-3 weeks that businesses became accustomed to during the recession.
Jo Long, Director at Expectations! Recruitment Services says: “During a recession, employee loyalty increases as job scarcity and insecurity drive employees to stay with their employer; in turn employers have weeks or even months to fill vacancies, responding to market pressures and expecting excellent value for money.
“Once the market returns to buoyancy, and in this case entering a period of extreme skills shortage, the tables are turned and employees have far greater choice of where to apply and offer their skills.”
Victoria Maddock, Managing Director, Expectations! Recruitment Services says: “Businesses can increase the time they have to appoint a candidate by properly planning their recruitment process.
“Holding all interviews in a 24 or 48 hour window, including professional recruiters or assessment centres, and communicating daily all help to increase the likelihood of ensuring a potential employee is happy to wait.”
The latest REC/KPMG report on jobs for February continues to paint a bright picture of the UK jobs market. It suggests that permanent staff placements rose further in February with the rate of growth in appointments marked and the fastest since last October. Temp billings also rose strongly at their sharpest pace for five months.
Vacancies available for people seeking employment also continued to increase in February and the overall demand for staff grew at the strongest rate in four months, with both permanent and temporary workers seeing faster increases.
Permanent staff starting salaries continue to increase in February with the rate of growth unchanged from the marked pace seen in January. Temporary and contract staff hourly pay rates also rose further with the latest increase stronger than seen one month previously. The availability of staff to fill job vacancies decreased further in February with both permanent and temporary candidate supply down faster than in the previous month.
Commenting on the latest survey results, Bernard Brown, Partner and Head of Business Services at KPMG, said: “Recovery in the job market is gaining real traction, and this should help shore up consumer confidence in the run up to the election. The recovery is being heavily driven by hiring activity by UK plc, while the public sector remains in a semi-stasis ahead of further anticipated cuts later in the year.”
Young job seekers are submitting applications in text speak and require more assistance to prepare them for working life, according to a report. The report, conducted by AMs, discovered that young people are also overestimating the cost of getting a job, “preferring the safety net of the benefits system instead”.
The firm has suggested ways to redress a “fundamental imbalance towards academic study”, although the Welsh government believes that the problem is being exaggerated as youth unemployment is falling faster than in other parts of the UK.
Employers have cited a lack of so-called “soft” or “work-ready” skills, such as time-keeping and knowing how to answer the phone together with more basic numerical and literacy skills.
Insurers Admiral revealed that many young candidates were not successful with their applications because of poor grammar and spelling, despite the company not asking for formal qualifications.
Employers are divided over whether employment tribunal fees should be scrapped because workers can no longer afford to make the claims, research shows. Since the fee system was introduced 14 months ago, the amount of claims has fallen by 70% to reduce vexatious cases.
Bosses of firms pressurised the Government to introduce deterrents in order to reduce the likelihood of drawn-out cases, as they were faced with costly and time consuming hearings.
However, the sharp drop in claims, coupled with union protests, has forced a rethink and Business Secretary, Vince Cable, has launched a review of tribunal fees, while Labour has promised a rethink if it wins the general election.
In a poll of 1,000 employers by the Chartered Institute of Personnel and Development (CIPD), the unease among employers regarding the fees was reflected. 38% represented the majority who voted for no change but 36% believed the fees should be either significantly reduced or abolished altogether. The remaining 27% were undecided.
Employees with a dilemma can expect to pay up to £1,200 to bring a claim before a tribunal under the current fee system. Employers revealed that their costs to defend a case can accumulate to several thousand pounds and also involve them spending an average of 18 working days at hearings.
UK unemployment has fallen by 102,000 to 1.86m in the three months to January, official figures show. The unemployment rate remains at 5.7% but the number of people in work is at an all-time high, according to the Office for National Statistics (ONS).
The number of people claiming Jobseeker’s Allowance also fell to 791,200, its lowest level since 2008. Average earnings in the three months to January, including bonuses, rose 1.8% compared with a year earlier. Regular pay, which excludes bonus payments, rose by 1.6%, in the same period compared with a year ago. It means earnings continue to outstrip consumer price index (CPI) inflation, which official figures showed fell to a record low of 0.3% in January.
The employment rate now stands at 73.3%, the highest rate of people in work since the ONS began keeping records in 1971. However, the number of young people out of work has stayed stubbornly high. The ONS said the number of 16 to 24-year-olds out of work fell by just 12,000 in the three months to January, to 743,000 – a rate of 16.2%.
A survey by recruitment company Bullhorn has shown Twitter has overtaken Facebook as the preferred recruitment network for candidates and recruiters in the UK.
The firm conducted a Global Social Recruiting Activity Report, which reviewed the social media activity of 33,800 UK recruiters, and found that 28% of recruiters are now active on Twitter, compared to just 15% on Facebook.
According to the report, Twitter averages 2.5 times as many views per job posting as Facebook and receives an average of 1.4 applications per job posting.
The research also reveals UK recruiters’ average LinkedIn connections increased 12% from 840 to 940, compared with a 46% increase in Twitter followers to an average of more than 550. That coincides with Twitter’s own rapid growth in the UK, swelling from 10m active users in 2013 to nearly 15m in 2014.
Peter Linas, international MD of Bullhorn, commented on the findings: “While LinkedIn retains its title as the world’s largest professional network, candidates are beginning to look elsewhere for jobs, meaning recruiters can’t just rely on LinkedIn – today’s most successful recruiters must be active across a whole range of social platforms if they are to maximise their chances of finding the best candidates.
The British Chambers of Commerce has increased its 2014 GDP to 3.2% from 3.1%, the highest growth rate since 2007. It has also upped its forecast for 2015 to 2.8% from 2.7% and left 2016 unchanged at 2016.
The increase reflects stronger employment figures and higher than expected growth in Q3 and Q4 2014 than previously forecast in May.
The business group, which represents thousands of companies across the UK, is forecasting a moderate slowdown in growth from 2015 reflecting a deceleration in household consumption and falling public spending as a share of GDP.
BCC Director General John Longworth says we must do everything possible to ensure the strong growth in 2014 is not a flash in the pan. He calls the expected slowdown in 2015 and 2016 a warning sign for the UK which is currently too reliant on consumer spending as a growth driver. He added “We must make sure the stellar growth in 2014 is not a flash in the pan.”
The BCC is forecasting GDP growth of 0.8% in Q3 2014 but has reduced its estimate of exports of goods and services to 0.8% for 2014 from 1.9% and to 4.1% from 4.2% in 2015.
The group is still forecasting the first rise in UK interest rates in Q1 2015 to 0.75% with interest rates reaching 2.25% by Q4 2016. It also expects the unemployment rate to continue to fall to 5.5% in Q2 2015, 5% in Q2 2016 and to 4.9% in Q2 2017.
A report from Incomes Data Services (IDS) says UK businesses are planning to hire more graduates this year as confidence in the economic recovery grows, but warns that job seekers fresh out of university should expect lower starting salaries.
UK employers are expecting to take on 18% more graduates this year following a 4.3% increase in 2013. The study surveyed over 100 organisations and found that the financial services sector was particularly bullish looking to emply 42% more graduates this summer than last year while both the manufacturing and service sectors are also positive with growth of 22% forecast.
However, while the number os jobs available is rising, the average starting salary will drop, the IDS warned. Around 60% of employers froze their graduate starting salaries again last year and 65% have not increased their rates for 2014.