Employer confidence in hiring and investment decisions has declined by six percentage points from last month, according to the Recruitment & Employment Confederation (REC).
Confidence has now dropped to net -1, the first time this measure has dropped into negative territory since the monthly JobsOutlook report started in 2016.
Employer confidence in the economy has also dropped again by eight percentage points from last month. This is the lowest level (at net -28) since the survey began measuring sentiment about the economy among Britain’s businesses, and is 545 points lower than in June 2016.
Despite this weaker outlook, the REC said employers should still increase hiring in areas where skills are needed. Half (49%) of UK employers expressed concern about the availability of permanent-hire candidates, with a lack of engineering and technical and health and social care workers continuing to cause the most concern.
There is also concern about the availability of agency workers, with over a third (35%) of employers intending to hire temporary workers expressing concern over insufficient numbers of agency workers with the required skills. This is the same percentage as a year earlier. Employers are expecting the most severe skills shortages among construction workers, followed by education workers and drivers.
Neil Carberry, chief executive of the REC, said the figures are to be expected as the country faces Brexit. “A year of falling business investment and weeks of Brexit inertia mean no-one should be surprised that employers’ confidence in hiring for their own business is now dropping,” he said.
“For months businesses have told us that they were concerned about the general outlook for the economy – it is clear to us that this concern is now closer to home. Lower use of temporary labour is a sign of lower demand.”
He added that he was confident the job market would remain strong in spite of the setbacks: “But our jobs market is robust. Even now recruiters are finding people new jobs and helping companies to compete. The fact that permanent hiring plans are still positive is a sign that the economy will deliver, if the fog of uncertainty is lifted from British business.”
This Friday (29 March) marks the day that Britain was initially set to leave the EU – a deadline that has now been extended to 22 May if British MPs approve PM Theresa May's deal this week, or 12 April if they do not.
Yesterday Donald Tusk urged the European parliament to consider a longer delay to allow time for the country to “reconsider its strategy”. He added that the six million British people who signed a petition for a people’s vote on Brexit “should not be ignored”.
“The extension to the Brexit deadline gives us some space to find a pragmatic deal that will give the UK’s businesses the certainty they need to invest and create jobs. And it avoids a no deal, which the majority of recruiters – in line with the majority of all British businesses – see as deeply problematic for the economy and the jobs market,” Carberry said.
“But we cannot delay forever. It is in politicians’ power to make the weaker data we see today a blip. Our labour market is strong. Giving firms certainty about a future deal that supports trade, jobs and investment would get the UK back on track.”
This comes as none of the alternative Brexit proposals brought by British MPs secured backing in a series of Commons votes on Wednesday, while Theresa May promised to stand down as PM if MPs back her deal.