Member Article

Hiring intentions ‘sky-high’ while productivity remains static

The hiring intentions of UK firms are at ‘sky-high’ levels, according to the latest Business Trends Report by accountants and business advisers BDO LLP.

With BDO’s Employment Index measuring 113.0, which is well above its long-term trend, the suggestion is that UK firms will continue to boost job creation in the coming months.

However, BDA states that there are big areas of concern for the economy, including its ‘puzzling failure’ to increase productivity, despite continuing strong economic growth.

The report states British workers’ output per hour has been static during the last two years of the recovery.

Despite this negative trend, BDO’s Output and Optimism Indices, which predict economic growth three and six months ahead respectively, remain significantly above the 100 mark, which indicates 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.

Peter Hemington, partner at BDO LLP, 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”.

This was posted in Bdaily's Members' News section by Ellen Forster .