A survey showed that British employers’ hiring plans have risen from an 18-month low, contrasting with other less upbeat signs from the labour market that prompted two Bank of England policymakers to call for a cut in interest rates last week. The Chartered Institute of Personnel and Development (CIPD) said its quarterly net employment balance rose to +22 from +18, bringing it back in line with its average over the past year.
“Despite the political uncertainty, employers have held their nerve and adopted a ‘business as usual’ approach to their hiring needs,” CIPD economist Jon Boys said. Two Bank of England officials said last week the labour market was starting to sour as they voted to cut borrowing costs. Low unemployment and solid wage growth have helped cushion the economy while businesses have cut investment due to the US-China trade war and Brexit uncertainty. However, official data has shown a fall in the number of people in work recently.
An aggregate of business sentiment surveys calculated by accountancy firm BDO sank to its lowest since March 2012 in October. “Given British businesses are telling us that new hires and investment are hard to justify at the moment, growth will continue to remain elusive until there is some kind of resolution of the Brexit conundrum,” BDO partner Peter Hemington said. By contrast the CIPD said some of its members, who mostly work at large public and private-sector employers, were benefiting from higher spending on public services.
But the outlook for wages was more muted and the CIPD warned that weak productivity growth was likely to put the brakes on private-sector pay rises. Employers’ average expectation for future pay settlements was unchanged at 2% in the three months to September. Private-sector employers cut their expectations to 2.2% from 2.5%, while public-sector expectations rose to 2.0% from 1.5%.
