Hiring intentions declined across the services and manufacturing sectors in July, as employers reported a more pessimistic outlook, according to accountancy and advisory firm BDO.
BDO’s Employment Index fell for the first time in six months as employers scaled back hiring efforts amid caution over higher interest rates, weak global demand and supply difficulties.
The number of vacancies across the sectors fell by 85,000 in Q2.
Manufacturing hiring
Mixed weather on horizon for UK jobs market
Its Optimism Index also declined for the first time in four months. In manufacturing, the optimism score was 93.56 – a score of 95 indicates expansion rather than contraction. However, the services sector remained much more optimistic with a score of 99.57.
BDO expects to see further declines in optimism and employment, as the threat of recession in late 2023 and early 2024 looms.
Its findings chime with the latest KPMG and REC Report on Jobs, which showed permanent placements are falling at their quickest rate since June 2020.
Kaley Crossthwaite, partner at BDO LLP, said: “A more pessimistic outlook from businesses and consequent loosening of the labour market are the first indicators of the slow in economic growth expected towards the end of the year.
“With yet another hike in interest rates from the Bank of England last week, this downturn is only set to worsen in what should be a golden quarter for many, if more isn’t done to support businesses. To reverse these trends, government needs to work more closely with industry to ensure firms of all sizes have tailored support in order to weather the storm, invest and grow.”
Josh Boer, director at tech consultancy VeUP said: “SMEs are the lifeblood of the UK economy, creating jobs, spreading opportunity, and enabling growth. Far too many companies with big ambitions and exciting products and services are being left out in the cold when it comes to securing financial backing.
“If we want to reboot the economy and kickstart growth, we need to get behind the next generation of entrepreneurs, equipping them with the skills, technology, and funding to thrive, despite the turbulent economic outlook.”
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