UK hiring intentions upbeat but productivity stagnant, BDO report reveals
Despite backdrop of enhanced optimism, significant areas of concern remain as UK continues failure to increase productivity
THE HIRING INTENTIONS of UK companies are at levels even higher than the mid-2000s boom, according to the latest Business Trends Report by accountants BDO.
The Top Ten firm’s Employment Index recorded a figure of 113.0 – well above its long-term trend – suggesting that UK firms will continue to boost job creation over the coming months.
Despite the backdrop of enhanced optimism, significant areas of concern for the economy remain as the UK continues its “puzzling” failure to increase productivity, despite continuing strong economic expansion.
British workers’ output per hour has remained static during the last two years of the recovery, an unprecedented scenario since World War II and a trend unique amongst advanced economies.
BDO partner, Peter Hemington, said: “While it is encouraging to see strong business confidence, the UK’s continuing poor labour productivity performance is a very significant concern. Although employment growth in recent years has been strong, much of this has been in part-time jobs.
“Productivity ultimately determines our prosperity so it is a crucial area that must be addressed. Policymakers of all persuasion must take on this productivity puzzle”.
Despite the negative elements, BDO’s Output and Optimism Indices, which predict economic growth three and six months ahead respectively, remain significantly above the 100 mark, indicative of growth above the long-term trend.
The Output Index rose to 103.9 in March while the Optimism Index held firm at 104.9, revealing UK business confidence to be at levels not seen since summer 2014. Comapnies have been given an additional fillip as input costs continue to drop, with BDO’s Inflation Index sitting at just 93.8 (down from 94.7 last month), indicating deflation.