Private sector recruitment to increase, despite fragile economy

Private sector employment

Employers from the private sector intend to hire new staff in the coming months, despite UK businesses not anticipating economic growth in the next two quarters. According to the latest Business Trends report by accountants and business advisers BDO LLP UK businesses’ hiring intentions over the next two quarters, reached 96.0 in March, the highest since August 2011. Peter Hemington, Partner, BDO LLP, commented: “It is encouraging to see improvement in UK businesses’ hiring intentions, particularly in light of the imminent public sector payroll cuts which will add pressure to the unemployment rate.”

This is the third consecutive month that the recruitment index has been at or above the crucial 95.0 level that indicates employment growth, although employers still do not anticipate economic growth in the next two quarters. BDO’s Output and Optimism indices – which predict short-run turnover expectations and business performance a quarter and two quarters ahead – sit at just 93.0 and 92.2 respectively.  These figures remain well below 95.0 (the level that indicates growth) which suggests economic conditions will remain tough until at least mid-2013.

More encouragingly, service sector confidence moved up substantially this month, with optimism increasing to 93.2 from 89.6 in February and output rising to 93.2 from 91.5 last month. While these March indices are still below the 95.0 mark, these increases are a welcome sign as the services sector makes up roughly three quarters of the UK economy. Optimism in the sector is now at its highest point since October 2012.

By Sara Bean