Hiring intentions fail to recover from 10-year low

Hiring intentions remained at a 10-year low in January 2024, despite optimism increasing in the services and manufacturing sectors.

The employment index from business advisory firm BDO fell for the seventh consecutive month to hit another decade low of 98.77 last month, its weakest reading since August 2013. A reading below 100 indicates a contraction in demand for employees.

BDO compared UK employers’ current hesitancy to recruit with that seen in the years following the global financial crisis that began in 2007.

It noted that projections by the Centre for Economic and Business Research show the unemployment rate will climb in the coming months, with peaks of 4.6% anticipated in both Q2 and Q3 of 2024.

The findings from BDO’s latest business trends report also chimed with recent findings from the Recruitment and Employment Confederation and KPMG, which reported that hiring into permanent positions fell sharply in January.

Fewer employers are expecting to increase headcounts in the coming months, the CIPD’s latest labour market outlook revealed.

BDO also found that output rose for the third consecutive month, mainly driven by increases in the services sector which has experienced a post-Christmas surge in demand.

Both the services optimism index and manufacturing optimism index, which measure business confidence, showed slight increases on the previous month with businesses hopeful for interest rate cuts and economic improvements.

Kaley Crossthwaite, partner at BDO LLP, said: “It’s encouraging to see our resilient services sector spearheading some positive momentum in January. As businesses entered the beginning of 2024, they did so with a sense of cautious optimism.

“With output expected to continue rising, recession easing and businesses hopeful of further interest rate cuts – businesses have started the year with a cautious optimism.

“But we can’t be complacent. While certain pressures are beginning to ease, demand hasn’t quite regained its pre-pandemic vigour and these businesses will continue to need targeted support in the months ahead.”

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