The business advisory firm BDO said UK companies reported the fastest growth in the labour market since February 2020.
BDO said its index, which measures business sentiment among senior managers, rose for a fifth consecutive month to a reading of 112.74 last month – a two-point increase compared with February. Anything above 95 is considered to be growth.
Though employment growth in the UK returned to pre-pandemic levels in March, the jobs boom looks set to be short-lived amid rising living costs and the impact of the war in Ukraine.
The Resolution Foundation, an independent think tank that monitors living standards, said wage growth had been driven up by a competitive labour market as firms increased pay to attract and retain workers. However, its economists fear wage growth will soon be offset by rising inflation and soaring energy prices, meaning workers will not feel the effects of a buoyant labour market.
Nye Cominetti, a senior economist at the Resolution Foundation, said: “With inflation set to reach 8% in the coming months, most workers’ earnings will fall in real terms, further squeezing living standards in the months ahead.”
