UK jobs growth continues to slow

- Weakest Q2 employment Outlook since 1993
- Employers cautious about hiring plans in Q2 2008
- Least optimistic Q2 results in over a decade for Finance & Business Services sector
- UK Net Employment Outlook 6%

Employer hiring confidence will continue to ease this Spring as employers reduce their hiring plans for the third consecutive quarter, according to the latest Manpower Employment Outlook Survey. The dip in hiring confidence for the period April to June is reflected across almost all sectors and regions surveyed, but is led by a marked decrease in hiring activity by employers in the Finance & Business Services sector.

Mark Cahill, Managing Director of Manpower UK, says: ìEmployer hiring confidence continues to weaken with the balance of employers taking on new staff at a pace we have not seen in 15 years. Concerns about the strength and performance of the UK economy, coupled with recent worries about the stock market and consumer confidence, is having an impact ñ in particular in the Finance & Business Services sector. However, the overall labour market remains stable with more employers still hiring than making cuts. In uncertain times, employers traditionally take a ëwait and seeí approach to hiring.î

ìIn the face of increasing pressures, the challenge for many employers is to maximise the resource they already have. Separate research we conducted reveals this to be the key HR priority for UK employers through 2008.î

The figures released today in the Manpower Employment Outlook Survey, a quarterly study of UK hiring trends, highlights a cautious labour market. The survey, of over 2,100 employers, reveals that nine per cent of employers plan to take on more staff, three per cent intend to make headcount reductions and 86 per cent expect to make no changes to staffing levels, giving a Net Employment Outlook1 of 6%. The Outlook remains the same when seasonal variations are removed from the data.

Uncertainty amongst employers in the Finance & Business Services sector has led to the most cautious Q2 hiring plans for this sector in over a decade (since Q2 1996) with an Outlook of 7%. Employers in the Business Services sub-sector ( 7%) reveal their weakest period of hiring confidence in four years (since Q1 2004) with a drop of three and 11 percentage points over the quarter and year respectively. This overall fall in hiring confidence is also reflected in the Finance sub-sector ( 4%), with employers anticipating a considerable drop of 16 and 23 percentage points over the quarter and year, respectively.

Cahill comments: ìThe decline in hiring confidence in the City and financial institutions sparks a genuine concern over the impact of the credit crunch. We are seeing a significant slowdown in this sector compared to last year and whilst the figures are still positive, the current climate is one of uncertainty. A number of City employers have already started to make redundancies and it is likely we will see more reviewing their staffing requirements in the coming months.î

Overseas demand for raw materials is having a positive impact on the Mining sector with employers reporting the most optimistic Outlook of the nine business sectors surveyed ( 23%) - a considerable increase of 25 percentage points on the quarter and eight percentage points over the year. Transport & Communications employers are the least optimistic of all business sectors surveyed, intending to take on as many staff as they plan to reduce (0%). Comments Cahill: ìWith the UK mobile phone market reaching saturation point, there are less growth opportunities in this part of the telecoms market contributing to keeping hiring plans stable.î

Business sectors recruiting above the national average are the Utilities ( 12%), Community & Social ( 9%), and Manufacturing ( 8%) employers.

Hiring confidence has improved in the Hotels & Retail sector ( 5%) by four percentage points over the last quarter but has declined by eight points on the year. On the High Street ( 6%) employer hiring plans are cautiously optimistic reporting a modest decrease from last year ( 12% Q2 2007). Moreover, employers in the Hotel & Restaurants sub-sector ( 3%) reveal a sizeable decrease in hiring confidence from last year (Q2 2007 20%).

Showing encouraging signs this quarter are employers in the Construction sector ( 1%). The Outlook is an increase of six percentage points over the quarter and reveals a no change figure of 88 percent. Cahill comments: ìDespite concerns over falling house prices and increased costs of raw materials, employer hiring confidence in the Construction sector is positive. Employers have benefited from the influx of migrant labour and consequently have built up strong workforces. However, concerns over a slowdown in the jobs market could threaten the availability of migrant workers as they seek work elsewhere in Europe. In this situation, employers will need to think carefully about their retention and recruitment programmes.î

At a regional level, all employers report positive or neutral hiring plans over the next three months. Employers in the East ( 11%) are the most optimistic of all regions surveyed whilst those in the North West (0%), East Midlands (0%) and South West ( 2%) are the least optimistic about their hiring intentions. Employers in all of the regions surveyed, with the exception of the East, reported decreases both year-on-year and quarter-on-quarter in their hiring plans. Employers in seven of the 12 regions surveyed anticipate a hiring outlook equal to or above the national average.

Across the countries surveyed in the Europe, Middle East and Africa (EMEA) region, employers report varying degrees of positive hiring activity, although employers in 10 of the countries are reporting less optimistic Net Employment Outlooks compared to Quarter 2 2007. Employers in Romania, Poland, Greece, South Africa and Norway are most optimistic about adding to their workforces. In contrast, hiring optimism among Irish and Spanish employers fell considerably from one year ago. Notably, compared to Quarter 2 2007, Outlooks improved slightly in Austria and France, while the Outlook remained stable in Germany.