The outlook for employment in the UK has fallen for the third consecutive month following half a decade of near sustained growth, according to a new report from accountants and business advisors BDO LLP.
BDO’s Employment Index, which combines forward-looking employment intentions as well as the proportion of part-time or temporary workers in the UK jobs market, fell to 112.76 points in July – the lowest level since May last year. The number of job vacancies in the UK has also fallen 4% since the start of the year as companies grapple with an increasingly sluggish economy.
The report further highlights the pressure of increasing wage growth on businesses. Average weekly earnings increased 3.4% in the three months to May – 0.2 percentage points higher than the three months to April. This growth, set against the backdrop of the negative economic outlook, has meant that companies are looking to save costs by cutting hiring, causing the jobs market to plateau.
Andrew Mair, Partner and Head of BDO in the East Midlands, said: “This could be the beginning of the end of the strong employment market in the UK. It has remained one of the more resilient pillars of the UK economy, even in the face of Brexit, but the glory years appear to be over. Businesses are facing a conundrum of upwards pressure on wages even while the economy lags, so hiring plans are taking a hit.”
The negative outlook was reflected elsewhere in BDO’s Business Trends report. BDO’s Output Index fell by 0.25 points in July, reaching its lowest score since the same period last year. Manufacturing drove the decline, falling by 2.21 points as manufacturers use up stockpiles built up in the face of a no-deal Brexit.
Despite this doom and gloom, optimism in the manufacturing industry drove the Optimism Index slightly higher in July.
Andrew Mair added: “UK businesspeople remained surprisingly upbeat this month, even though economic indicators are by and large going the wrong way. Confidence drives employment and investment, so how it holds up over the next couple of months will be crucial to the UK staying in growth territory in the run up to Brexit.”
To download BDO’s Business Trends New Economy report and find out more visit: www.neweconomy.bdo.co.uk.