The latest Manpower Employment Outlook Survey shows that the dip in hiring confidence for the period April to June is reflected across almost all sectors and regions surveyed, but is led by a marked decrease in hiring activity by employers in the finance and business services sector.
Overall labour market remains stable
Mark Cahill, managing director of Manpower UK, says that employer hiring confidence continues to weaken with the balance of employers taking on new staff at a pace not seen in 15 years.
Concerns about the strength and performance of the UK economy, coupled with recent worries about the stock market and consumer confidence, is having an impact in particular in the finance and business services sector.
The overall labour market remains stable, however, with more employers still hiring than making cuts.
Cahill adds that employers traditionally take a ‘wait and see’ approach to hiring in uncertain times.
“In the face of increasing pressures, the challenge for many employers is to maximise the resource they already have. Separate research we conducted reveals this to be the key HR priority for UK employers through 2008,” he explains.
Business services sector
The figures released in the Manpower Employment Outlook Survey, a quarterly study of UK hiring trends, highlights a cautious labour market.
The survey, of over 2,100 employers, reveals that nine per cent of employers plan to take on more staff, three per cent intend to make headcount reductions and 86 per cent expect to make no changes to staffing levels, giving a Net Employment Outlook of +6 per cent.
The Outlook remains the same when seasonal variations are removed from the data.
Uncertainty amongst employers in the finance and business services sector has led to the most cautious Q2 hiring plans for this sector in over a decade (since Q2 1996) with an Outlook of +7 per cent.
Employers in the business services sub-sector (+7 per cent) reveal their weakest period of hiring confidence in four years (since Q1 2004) with a drop of three and 11 percentage points over the quarter and year respectively.
This overall fall in hiring confidence is also reflected in the Finance sub-sector (+4 per cent), with employers anticipating a considerable drop of 16 and 23 percentage points over the quarter and year, respectively.
Redundancies in the City
Cahill says that the decline in hiring confidence in the City and financial institutions sparks a genuine concern over the impact of the credit crunch.
He points out that we are seeing a significant slowdown in this sector compared to last year and adds that whilst the figures are still positive, the current climate is one of uncertainty.
“A number of City employers have already started to make redundancies and it is likely we will see more reviewing their staffing requirements in the coming months,” Cahill warns.
Overseas demand for raw materials is having a positive impact on the mining sector with employers reporting the most optimistic Outlook of the nine business sectors surveyed (+23 per cent) - a considerable increase of 25 percentage points on the quarter and eight percentage points over the year.
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