Growing business confidence has had a beneficial effect upon the country’s unemployment statistics, which have fallen steeply from the peak figures recorded in the aftermath of the recession.
The latest research from Markit showed that this drive for recruitment reached record levels in February, with private sector firms taking on 150,000 new employees in the first financial quarter. Furthermore, hiring was relatively even throughout all sectors of the economy, indicating the positive changes made to Britain’s financial status are benefiting a wide range of private companies.
Chief economist at Markit, Chris Williamson, also pointed out that if expansion continues to build in momentum, the economy could grow by 0.7 per cent in the first three months of 2014.
He says; “The brightening outlook has prompted firms to take on staff at a rate not seen before over the PMI surveys’ 16 year history.
“The buoyancy of the surveys suggests that even the current consensus for the year for GDP to expand by 2.7 per cent could be too conservative, given the pledge by the Bank of England not to tighten policy in the face of above trend growth, provided inflation remains under control.”
Although the predicted 150,000 jobs created in the first quarter are a slight slowdown from results recorded between October and December last year, which peaked at 193,000, it is important to highlight the potential seasonal distortion affecting results. A large number of retail and hospitality firms in particular tend to create numerous part time, temporary places in order to deal with the Christmas rush, whereas jobs created in the first quarter tend to be longer term and significantly more stable.
While the unemployment rate remains stable at 7.2 per cent, there are hopes that this situation will change this year. With more UK citizens finding stable work, sectors such as the retail and leisure industries in particular stand to profit, meaning that many firms within these areas are now seeking to expand in order to speed up their own rates of recovery.
Furthermore, the combination of a higher employment rate and lower inflation has left consumers considerably better off than they were this time last year. Food and clothing retailers are carefully examining the possibilities of investing in discounting and promotions, meaning that the only real rising cost consumers now pinpoint as a major concern is that of electricity and gas.
With Markit confident that the pace of job creation will remain stable, and will potentially even grow further, this year, many will be hoping that 2014 will mark the end of years of economic uncertainty in the UK.
Do you think that mass hiring drives by companies of all sizes is more likely to speed up recovery and allow consumers to increase spending, or do other factors such as the rate of inflation and shop pricing play a greater role in economic strength?
