The latest Quarterly Labour Market Outlook (LMO) report reveals that more employers are expecting to hire new staff and fewer are expecting to make existing employees redundant over the next three months.
The Chartered Institute of Personnel Development (CIPD), who compile the report by interviewing more than 1,000 HR professionals found that the difference between the proportion of employers who expect to increase staff levels and those who expect to decrease staff levels is now +14, up from +9 in the previous quarter.
Mark Beatson, Chief Economist, CIPD said: “This is the sixth consecutive quarter with a positive net employment balance.”
This is the highest level since the recession in 2008 and could have implications to the announcement last week by the Bank of England on linking forward guidance on interest rates to unemployment levels.
The Governor, Mark Carney, said the central bank was not planning on raising interest rates until the unemployment rate has fallen from its current level of 7.8 per cent to 7.0 per cent. Mr Carney said he expected this to happen in 2016, and if it did a full review of policy would occur that could lead to an increase in interest rates.
The latest LMO survey indicates that the unemployment rate might fall to 7.0 per cent sooner than the Bank of England thinks.
Both the private and the public sector has seen increases in their employment balances, with the former up from +21 to +26 and the latter rising from -25 to -31.
However, there is regional variation in employers’ hiring intentions across the UK, with firms much more confident in London and the South, illustrated by positive balances in the south of +37 and the Midlands at +34, compared with an overall negative score of -3 in the North of England.
The areas of business where recruitment intentions are at their highest are in communications, with 80 per cent of firms expecting to hire new staff and in finance, insurance and real estate, at 71 per cent.
The proportion of employers expecting to make redundancies in the next quarter has fallen to 26 per cent, the second consecutive fall, from 29 per cent in the spring of 2013 and 31 per cent over the winter of 2012-13.
Despite the improved confidence amongst business, the outlook for pay is unchanged. In the 12 months to February 2014, average earnings are expected to go up by 1.7 per cent, unchanged from three months ago.
Among those employers predicting a pay rise over the next 12 months, the average forecast has gone up from 2.2 per cent to 2.5 per cent.
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