Employers are feeling more confident about their hiring prospects and the state of the economy, in further signs that the labour market is still resisting the pressure of rising interest rates.
A closely watched survey of employers in the public and private sector, carried out by the Recruitment and Employment Confederation (REC), found that sentiment improved between April and June, even as borrowing costs surged and inflation persisted at high levels.
The survey found that a third of employers were more optimistic about hiring and investment, leaving the net balance at the highest level since the start of 2022.
Neil Carberry, chief executive of the trade body, said companies were still intent on expanding their workforces despite the slowdown in growth and uncertainty about the path of inflation this year. “Businesses across the country are clear that they believe in their business and its plans,” he added.
“While the overall picture of demand from employers remains very robust, the more that can be done by government to articulate a clear plan for growth, the more likely it is that firms will be willing to back their belief in their own business over concerns about the wider economic weather.”
The UK’s labour market has defied the pressure from high borrowing costs, which are designed to make the cost of investment and hiring more expensive for companies. Overall unemployment rose unexpectedly to 4 per cent in the three months to May, higher than forecast, but has been stuck at historically low levels over the past year.
REC’s survey showed that demand for permanent and temporary workers was unchanged between April and June. Businesses in sectors such as health and retail have long complained of worker shortages resulting from a sharp fall in the size of the labour market after the pandemic.
This has been caused by a record number of people being designated with long-term illness, older workers choosing early retirement, and the end of free movement after the UK’s exit from the EU.