PRIVATE sector hiring intentions have hit a 19-month high, fuelling hopes that businesses will be able to absorb some of the forthcoming job losses in the public sector, according to a new survey.
BDO, the mid-tier accountancy firm, said its index of hiring intentions reached 96 in March, the highest since August 2011 and the third month in a row that the index has been at or above the 95 level that indicates growth.
Ian Beaumont, head of BDO in Yorkshire, said: “It is encouraging to see improvement in businesses’ hiring intentions, particularly in light of the imminent public sector payroll cuts which will add pressure to the unemployment rate.”
But the firm warned that businesses do not expect to see economic growth in the next two quarters, adding to fears that the UK economy is flatlining.
BDO’s indices measuring output and optimism are at 93 and 92 respectively, well below the level that indicates growth, suggesting that economic conditions will remain tough until at least summer 2013.
But service sector confidence was up substantially this month and is now at its highest point since October, mirroring the rebound in the sector seen in last week’s purchasing managers’ index.
The service sector makes up around three quarters of the UK economy.
Worryingly though, manufacturing sector data continued to decline, with optimisim plummeting from a reading of 94.5 in February to 88.2 in March.
The depreciating value of Sterling coupled with weak demand from domestic consumers and struggling Eurozone import partners is likely to be weighing on manufacturers’ confidence, said BDO.
Mr Beaumont said: “The plunging confidence of manufacturers is a particular cause for concern.
“A fundamental part of the Government’s rebalancing strategy is the encouragement of 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.”