Sluggish start for new year among UK employers as recorded hiring intentions are low.

ManpowerGroup records weak hiring confidence.

UK employers are reporting their weakest hiring confidence in seven years, according to new research from ManpowerGroup.  Hiring intentions for the first quarter of 2020 are down three percentage points to +2 per cent, the lowest they have been since 2012. Declining confidence in nearly every sector and region paints a sluggish picture for the start of 2020, with only a few bright spots standing out.

The ManpowerGroup Employment Outlook Survey is based on responses from 2,101 UK employers. It asks whether employers intend to hire additional workers or reduce the size of their workforce in the coming quarter. It is the most comprehensive, forward-looking employment survey of its kind and is used as a key economic indicator by both the Bank of England and the UK Government.

Chris Gray, director of ManpowerGroup UK says: “Signs of a slowing global economy, a General Election and a lack of clarity about Brexit are all weighing heavily on the minds of employers leading to many hiring plans being put on ice. Employers want certainty before they can make investment decisions and firm up hiring plans.”

Gray continues: “Employers are hitting the pause button after many years of strong hiring. The challenge is how employers ramp up their hiring plans in the future – the labour market continues to be very tight with employers continuing to report a shortage of skills such as engineers, IT staff, trades people, customer service representatives and medical professionals – irrespective of sector or location. We see little sign of skills shortages easing in the foreseeable future. Our advice is that employers must keep planning – thinking about their strategies for attraction, retention, training and succession planning to best prepare for the future.”

One of the most eye-catching figures this quarter is the abrupt fall of employer hiring confidence in London to -1 per cent, a five-percentage point quarterly decrease and the capital’s first negative Outlook since 2010.  This can perhaps be linked to the four-point decrease in the Finance and Business Services sector, which is now at +2 per cent.

Chris Gray adds: “Previous ManpowerGroup data has shown that where London leads, the country often follows. Like the UK as a whole, London’s economy is heavily reliant on the services sector.  We have already seen a wave of job cuts at professional services firms across the City in the past year, including KPMG and EY. The concern is that a poor showing in the capital is foretaste of what’s to come through the rest of 2020.”

In contrast, this quarter’s best performer is the West Midlands, with a two-percentage point increase to an upbeat +13 per cent.  With an economy already growing faster than anywhere else outside London since 2012, the West Midlands bucks the national trend with a further increase in employer hiring intentions. The manufacturing sector, which is heavily represented in the West Midlands, is also up this quarter with a one-point increase to +4 per cent.

Gray adds: “Perhaps not surprisingly, employers in the West Midlands are hiring. We’re seeing an increase in investment in skills in the automotive sector and its supply chain focussed particularly on electric vehicles and new technologies.  One factor here is the “Greta Thunberg effect” which is speeding up the demand for electric cars. The challenge will be filling the gaps – many employers are reporting difficulties with finding skilled staff and wage inflation is also driving up costs.”

Elsewhere in the regions and nations, the East Midlands, a bastion of positivity for many years, sees employer hiring confidence decrease considerably by 15 percentage points to -2 per cent, its lowest level in over a decade.  Along with London and the East Midlands, three other regions are in negative territory, suggesting a contraction in hiring:  Wales -1 per cent, Yorkshire and the Humber -1 per cent and the North East -4 per cent. The South East and the South West remain in positive territory, but the Outlook has weakened by three and eight percentage points, respectively. Lastly, Northern Ireland is down at 0, a four-point fall on the quarter, while England as a whole recorded a six-point fall to +1 per cent, its weakest level of optimism since 2012.

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