LONDON: Employers’ hiring intentions are at a “sky high” level and stronger than in the pre-recession boom, but concerns remain about the UK’s failure to grow productivity, according to a new report.
The latest Business Trends report by accountants and business advisers BDO gave an employment index reading of 113.0 for March. This was little changed from February’s reading of 113.1, remaining well above the 100 level that indicates growth above the long-term trend.
The reading suggested UK firms will continue to boost job creation in the coming months, according to the report. It said: “The hiring intentions of UK firms are at ‘sky-high’ levels with figures stronger than the heady days of the mid-2000s boom.”
Meanwhile, BDO’s optimism index, showing business confidence, remained well above the 100 mark.
But the report also pointed to the static level of British workers’ output per hour, with the trend “unique amongst advanced economies”. Office for National Statistics figures earlier this month showed productivity failing to grow since 2007 – a trend unprecedented in the post-war period.
The weakness has puzzled officials. It has been described by the International Monetary Fund as a major risk to growth.
BDO partner Peter Hemington said: “While it is encouraging to see strong business confidence, the UK’s continuing poor labour productivity performance is a very significant concern.
Although employment growth in recent years has been strong, much of this has been in part-time jobs. Productivity ultimately determines our prosperity, so it is a crucial area that must be addressed. Policy makers of all persuasions must take on this productivity puzzle.”
