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09-Sep-16

UK Economy Newsflash.... Its Actually not that bad!!

Positive news coming out of the recruitment industry, with the September 2016 Survey on hiring activity showing a rebound in August on hiring activity.

 Key points from the survey:

·      Permanent appointments rise for first time in three months

·      Temp billings increase at fastest pace since May

·      Permanent salary growth quickens

This agrees with the view from the Vertex group of Companies (www.vertex-solutions.co.uk). When we look back at the quarter before the Brexit vote, it is now clear to see that businesses were holding off decisions due to the uncertainty of direction. Whilst the result of the vote was certainly a shock, it has served to clarify the direction. We get the feeling that UK business is now in “Get on with it” mode.

We would however also echo the sentiment of skills shortage from the REC report. “The supply of candidates to fill vacancies remained an issue in August, with consultants signalling sharper falls in both permanent and temporary staff availabilities.” This could signal an increased usage of contract or temporary labour and in turn a rise in average rates. However, the contract picture will be skewed by the undoubted migration of contract labour from the public to the private sector that the recent legislative changes will trigger (http://goo.gl/ycQUYL). Perhaps this will counter the skills shortage somewhat, although it will certainly leave those in the public sector with an even larger problem!

Kevin Green (REC chief executive) notes

 “The priority now is to shore up business confidence. Much of this depends on progress the government can make in its difficult task of ensuring that UK businesses have the ability to trade with their neighbours in the EU. Developing an immigration policy which will allow employers to access enough candidates for the jobs available is vital. Employers from the public sector to agriculture and engineering to construction could be adversely affected if access to workers from outside the UK is limited.” (REC  Report on Jobs September 2016)

The recent media reports seem to have taken up the cry and are talking business up rather than down, which is great to see!

The telegraph confirms that the post Brexit vote should not indeed lead to recession, but more likely a minor slowdown in growth. (http://goo.gl/TKM2FW)

It is also reassuring to read the Mirror’s view that the service sector is holding up very well, post Brexit. “The number of firms in the industry – which accounts for 80% of the economy and includes everything from banks to restaurants – reported a pick-up in trade rose at the fastest rate in the survey’s 20-year history.” (http://goo.gl/QTQfRw)

It seems that the remaining piece in the jigsaw is indeed a clarification from UK Gov. However, it is hard to see this coming any time soon given the levels of procrastination and (to be fair to them) the complexity of the extraction process that faces us.

Thus we can conclude that our current state of "confusion" is actually the "new normal" congratulations to those who are taking the "Just get on with it" approach!