Index finds hiring intentions at all-time high
The UK economy continues to show positive signs with new data suggesting hiring intentions are hitting an all time high among British firms.
9 April 2018Hiring intentions among British companies are at record levels and business output has hit a seven-month peak, according to the latest Business Trends Report by accountants and business advisers BDO.
BDO’s Output Index, which measures UK business output, increased to 100.05 from 99.78. This is above the long-term growth trend of 100 and the highest reading the index has recorded since August of 2017.Although BDO’s Optimism Index, which measures how firms expect output to develop in the coming six months, dropped slightly to 102.26 this month, the fall was not enough to dampen the hiring intentions of UK firms, with April’s Employment Index increasing to 112.09 from 111.89 last month – the highest reading in the history of the Business Trends Report.“The index’s continued upward climb is likely driven by firms’ investment in people over capital, during a period of low wage growth,” said BDO.
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Meanwhile, the firm’s manufacturing output sub-index rose more than two points to 105.91 and the services output sub-index also increased – rises BDO attributed to a strengthening domestic outlook following a downward trend in inflation.Peter Hemington, a BDO partner, said, “The performance of both the manufacturing and services sectors is encouraging for the health of the UK economy and the data suggest that there will be an improvement in GDP growth over the next few months.“Businesses are retaining a positive outlook, and this may add to the pressure that the MPC feels to raise rates. But the recovery remains patchy and febrile with Brexit looming. The MPC must hold fast and keep interest rates to a minimum to encourage confidence and growth for UK businesses.”
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What is boosting hiring intentions in the UK?
The company said the strong economic outlook was primarily due to strong performances by both the services sector and manufacturing industries.BDO’s Output Index, which measures UK business output, increased to 100.05 from 99.78. This is above the long-term growth trend of 100 and the highest reading the index has recorded since August of 2017.Although BDO’s Optimism Index, which measures how firms expect output to develop in the coming six months, dropped slightly to 102.26 this month, the fall was not enough to dampen the hiring intentions of UK firms, with April’s Employment Index increasing to 112.09 from 111.89 last month – the highest reading in the history of the Business Trends Report.“The index’s continued upward climb is likely driven by firms’ investment in people over capital, during a period of low wage growth,” said BDO.
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- Profits up but Brexit cloud hovers over financial sector
Meanwhile, the firm’s manufacturing output sub-index rose more than two points to 105.91 and the services output sub-index also increased – rises BDO attributed to a strengthening domestic outlook following a downward trend in inflation.Peter Hemington, a BDO partner, said, “The performance of both the manufacturing and services sectors is encouraging for the health of the UK economy and the data suggest that there will be an improvement in GDP growth over the next few months.“Businesses are retaining a positive outlook, and this may add to the pressure that the MPC feels to raise rates. But the recovery remains patchy and febrile with Brexit looming. The MPC must hold fast and keep interest rates to a minimum to encourage confidence and growth for UK businesses.”
Resilience of financial firms in the UK
Coinciding with publication of the index was a survey by Lloyds Bank showing financial services firms continued to be concerned over the Brexit risks to the economy, although most of the 100-plus executives questioned expected output to remain resilient.Robina Barker Bennett, managing director of Lloyds financial institutions division, said, “As the biggest industry in the UK, the financial services sector is a crucial bellwether for the nation’s economic prospects.“Fears about Brexit are looming large as the final countdown begins to March 2019, but our survey suggests that the UK economy will prove to be resilient and that it will come through the challenges of the next few months relatively unscathed.“There is, however, a real risk that our growth will be slower this year than in all other advanced nations; and that we will fall to the back of the G7 pack.”For related news and features, visit our Enterprise section. Find out more about our upcoming Relocate Awards. Relocate’s new Global Mobility Toolkit provides free information, practical advice and support for HR, global mobility managers and global teams operating overseas.Access hundreds of global services and suppliers in our Online Directory ©2024 Re:locate magazine, published by Profile Locations, Spray Hill, Hastings Road, Lamberhurst, Kent TN3 8JB. All rights reserved. This publication (or any part thereof) may not be reproduced in any form without the prior written permission of Profile Locations. Profile Locations accepts no liability for the accuracy of the contents or any opinions expressed herein.
