Confidence in the economy turns positive for the first time in three years

Business and hiring confidence in the UK economy turned positive for the first time since June 2018, according to new industry data.

The latest REC JobsOutlook survey found that employers are increasingly optimistic about the economic outlook as pandemic restrictions have eased. In the three months to May, their confidence surged by a notable 21%.

According to REC this is the highest level recorded since July 2016.

Employers’ confidence in making hiring and investment decisions also remained buoyant was at the highest level since March 2016.

Neil Carberry, chief executive of the REC, said: “This surge in employers’ confidence in the UK economy is remarkable – an improvement of 61 percentage points from the previous quarter as restrictions were lifted and businesses started to open again.

“Positivity about hiring has steadily improved alongside that, and we are now seeing the highest levels of confidence for five years.

“However, we are seeing labour and skills shortages across the economy right now, which the pandemic has made worse. These could threaten to slow down the recovery if not addressed quickly. It’s vital that companies and governments come together and improve access to training and support for everyone who needs it, so that jobseekers are able to find work in those sectors that are growing.”

With the economic outlook improving and restrictions being eased between March and May, more businesses were looking to bring on temporary staff in the coming months to help them re-open. Hiring intentions for temporary agency workers in the short term (in the next three months) rose by six percentage points..

Demand for agency workers in the medium term (in the next 4-12 months) also rose by 24 points, markedly higher than the same period last year.

Employers’ intentions to hire permanent staff in both the short and medium term remained stable at 24 points and 26 respectively.

The majority (63%) of employers expect no change in their employees’ working location once restrictions are eased, compared to before the pandemic.