Positives in Private Sector Hiring

Figures from accountancy firm BDO’s employment index suggest that the private sector is looking to hire more staff than at any time in the last 19 months…

BDO Monthly Business Trends Indices April 2013Accounting firm BDO UK have released figures indicating that the private sector is looking to take on more staff in the next six months than they have in the previous two years.

BDO’s Monthly Business Trends Indices for April 2013 include the BDO Employment Index which measures the hiring intentions of UK businesses over the next two quarters.

The BDO Employment Index recorded a figure of 96.0 in March 2013, the highest it has been since August 2011.

An employment index figure of 95.0 is considered crucial as it is this level that indicates employment growth. This figure has been rising for the past 3 months in a row.

Indications of Confidence and Output

However, despite the positive outlook for employment, UK businesses are not actually expecting any economic growth over the next six months.

The figures for BDO’s Output Index rose from 92.1 in February to 93.0 in March but also fall short of the crucial 95.0 mark that would indicate growth.

Further scrutiny of the Output Index indicates that manufacturing output is down (From 94.1 in February to 92.4 in March) but that the service sector is showing signs of improvement over the same period (Up from 91.5 in February to 93.2 in March).

Again, looking in detail at the figures, optimism plunged for the manufacturing sector (From 94.5 to just 88.2). The "challenging conditions" in Europe have been highlighted as one cause of the fall in manufacturers’ confidence as the Eurozone, the UK’s biggest trading partner, suffers from ongoing financial problems.

The latest figures from the Office of National Statistics (ONS) seem to indicate that UK industrial output has actually grown, beating expectations.

Industrial output apparently rose by 1% in Febraury with one aspect, maunfacturing output, rising by 0.8% over January’s figures.

Business in the Months Ahead

With employment looking positive the risks still remain of no economic growth, inflationary pressures remaining and weakness in manufacturing and trading with Europe.

Peter Hemington, Partner at BDO LLP, had this to say about the findings of the latest business trends report:

“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.

“However, the plunging confidence of manufacturers is a particular cause for concern. A fundamental part of the Coalition Government’s “rebalancing” strategy is the encouragement of UK manufacturing. So, it was disappointing to see little action taken in last month’s budget to help this beleaguered sector. In particular, a time limited increase in capital allowances would have been a good step to take in order to encourage the manufacturing industry to invest and grow.”

You can see the full findings in the BDO Monthly Business trends Indices April 2013 (PDF).

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