Employers' hiring confidence reaches 19-month high

HIRING INTENTIONS are at their most positive for 19 months, according to BDO’s Employment Index.

The index, which gauges employment intentions over the following two quarters, has hit 96.0 the third consecutive month it has scored above 95.0. The 95.0 watermark is crucial as any score above it indicates employment growth.

Despite the positive sentiment, UK businesses do not expect economic growth during the two-quarter period. Optimism among manufacturers fell to 88.2, from 94.5 in February, with BDO output index falling to 92.4 from 94.1. The service sector saw optimism increase, to 93.2 from 89.6 in February.

Peter Hemington, partner, BDO said: “It is encouraging to see improvement in UK businesses’ hiring intentions, particularly in light of the imminent public sector payroll cuts which will add pressure to the unemployment rate.

“However, the plunging confidence of manufacturers is a particular cause for concern.

“A fundamental part of the coalition government’s ‘rebalancing’ strategy is the encouragement of UK manufacturing. So, it was disappointing to see little action taken in last month’s budget to help this beleaguered sector. In particular, a time limited increase in capital allowances would have been a good step to take in order to encourage the manufacturing industry to invest and grow.”

The indices form part of BDO’s Business Trends report.