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UK's employment outlook keeps head above water despite recession fears, reports Manpower

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The UK’s employment outlook has continued to keep its head above water, according to Manpower Group, which this morning unveiled its quarterly Employment Outlook Survey.

The survey is based on responses from 2,100 UK employers and asks whether employers intend to hire additional workers or reduce the size of their workforce in the coming economic quarter.

The national seasonally adjusted net employment outlook of +1% indicates the jobs market is still in positive territory, having shown similar promise in the second quarter of 2012 with an Outlook of +2%.

ManpowerGroup UK MD Mark Cahill said: "When you're going head to head with a return to recession at home and a burgeoning Eurozone crisis, by rights the jobs market should be in free fall - but that's not what we're seeing. Firms are still looking to hire albeit at a weaker pace than before but the sort of hiring that is going on is where you'd least expect it. Take the Finance and Business Services sector for example, which is +13%. We've all heard about banks shedding thousands of jobs, but the banks are also hiring thousands of temporary workers to deal with the fall out from the mis-selling of Payment Protection Insurance.

"Whilst these jobs aren't for life, a number of the banks have announced recently that they are setting aside more money to deal with the claims. As a result, the finance sector- so critical to the UK economy - is going to need to hold onto these workers for some time to come."

The Utilities sector continues to hire apace as well. With a runaway score of +16%, the sector sits at a five-year high.

The latest figures show employer confidence growing right across the South; the Net Employment Outlook of +5% for the South West, South East and the East of England. London is also firmly in positive territory with a score of +3%. This "Southern Comfort" stands in sharp contrast with Wales on -5%, whilst in the North of the UK, Scotland has a score of -6% and both the North East and the North West register flat market scores of 0%.

It's not just the North and South that are divided in the latest Manpower survey. There is also a split between large and small employers in terms of attitudes to hiring. Big businesses are more optimistic (+8%) than at any time since 2010. But when it comes to firms employing fewer than 10 members of staff are feeling the pinch at -2%.

Cahill said: "At this time of year, the jobs market always sees an influx of new entrants both from school leavers and graduates. It is encouraging to see that big businesses are looking to hire over the summer months and we welcome the various initiatives such firms have put in place - from graduate training schemes to apprenticeships. However if we want to pull ourselves out of recession, we're going to need young people and others to be work ready and have the in-demand skills in order to allow start-ups and entrepreneurs to flourish. For all the doom and gloom, let's not forget there are still hundreds of thousands of job vacancies out there."

Despite the overall tone of optimism surrounding the survey, some sectors continue to struggle. Construction, so often seen as a bellwether of economic activity, is once again a notably poor performer, failing to dig itself out of trouble still reporting a weak Outlook of -9%.

The news came as The Recruitment and Employment Confederation (REC) and KPMG published its monthly report on jobs for May, signaling a "modest rise" in permanent staff placements during the month, but the rate of growth was the weakest in the current five-month period of expansion.

The REC/KPMG found permanent staff salaries rose at the fastest rate for eight months in May, but the increase was only modest and well below the long-run series average. Temporary/contract staff pay rose at the weakest rate in five months.

Kevin Green, chief executive of the REC, said: "This month's data shows employers are becoming more cautious about hiring and while there is still growth in permanent placements, the figures have been getting weaker over the last two months. Clearly the economic backdrop and the eurozone crisis are making some employers think twice before taking on new staff.

"What's interesting are the niche areas that are seeing much stronger growth than the national average. In every month this year, the engineering and IT and computing sectors have seen solid increases in the number of workers recruited for permanent roles. And compared to other parts of the country, employers in the Midlands are confident about hiring more temporary and permanent employees.

"The temporary staff market has been contracting for the last six months, however, it's important to note that there are still over a million people per week working flexibly. Employers value the ability to flex their staffing costs based on current and future demand. In temp work too there are certain skills that are still in high demand - such as drivers, chefs and a whole range of IT expertise.

"Looking ahead, it's likely that unemployment figures will rise over the next few months as another wave of young people leave education. We have a weakening jobs market which will only improve once demand returns to the economy. More jobs being created in the private sector in 2012 is vital for our overall economic recovery so anything which boosts confidence is good news - the jubilee and the Olympics may yet help us turn the corner."

Bernard Brown, partner and head of business services at KPMG, added: "The latest Report on Jobs shows that the total number of hours worked per week in the UK increased by 8.4 million in the first quarter of 2012, compared to the previous three months. The hope is that all this extra effort can have a direct and positive effect on expanding the UK economy. Yet, judging by recent economic output data, there is a concern that we are simply working harder - but not necessarily smarter - and that real productivity growth still remains elusive.

"With the number of people securing permanent jobs increasing for the fifth consecutive month and official figures showing a drop in unemployment, it would be easy to assume that we are turning a corner. The reality, sadly, remains very different as the latest figures highlight the lowest monthly rise since last December, indicating a return to uncertainty and cautiousness when it comes to recruitment on the part of many employers.

"At least there are pockets of good news, with the Midlands remaining the strongest performer in terms of permanent placements and IT, engineering and construction also remaining in pole position when sector data is taken into consideration."