Employers sense glimmer of hope with jobs growth

Jobs were cut across five of the nine English regions last month, according to a the latest Lloyds TSB PMI index, with the North West experienced the steepest month-on-month fall in employment, followed by London.

But of the four regions showing a rise in employment, the strongest jobs growth was in Yorkshire and North Lincolnshire, where it recorded the fastest rate of jobs creation since February. Meanwhile, a separate survey, run in partnership with KPMG, showed “a sharp expansion” in permanent staff appointments in the North of England, with the growth in this area at a 29-month high.

And today, a survey by Manpower shows that Yorkshire and North Lincolnshire’s net employment outlook has increased by 10 percentage points since three months ago to plus two per cent in the first quarter of 2013.

Andrew McPhillips, Yorkshire Building Society’s chief economist, said the increase in activity in the region reported in these surveys is “encouraging”. “If output is improving and businesses believe it is more than a seasonal blip, the rise in permanent hiring seems a logical reaction from employers. This type of survey data is known for being a leading indicator before trends become apparent in the official government statistics so it provides a glimmer of hope that the start of 2013 will be better than the end of 2012.”

But he warned that this kind of survey data can be volatile, with one month’s increase being quickly erased the next as “the ‘zig-zag’ recovery” continues, adding: “We should wait until the positive signs turn into a trend before thinking things have turned the corner.”

The data was released after official figures on Friday showed a steeper-than-expected drop in manufacturing output, fuelling fears that the UK is facing a renewed slump this quarter. The decline adds to the recent flow of disappointing numbers for the UK economy at the start of the fourth quarter and bodes ill for GDP after a rise of one per cent in the autumn ended the longest double-dip recession since the 1950s.

Mr McPhillips added: “On a national level, the apparent mismatch between employment data and growth has been confusing many, including the Bank of England, on a national scale for the last 12 months. A simple first explanation is that GDP data is subject to many revisions, long after the time it relates to. It is possible that there will be an upward revision to recent data showing that things aren’t as bad as currently estimated.

“However it is unlikely that the data would be revised to the extent to explain all of the growth in employment. It is possible, therefore, that firms are recruiting the skills needed while the staff are still in the labour market, in anticipation of a recovery in the not-too-distant future.”

Yesterday, a report by the Institute for Public Policy Research said that although the jobless figures due to be released tomorrow were likely to drop, prospects were bleak for 2013.

And Tom Vosa, Yorkshire Bank economist, said the underlying picture is “one of stagnation in employment and a continued decline in real earnings”. “While the unemployment rate has not risen by as much as feared at the start of the recession, that partly reflects a switch to record levels of self-employment and significant amounts of underemployment, with workers having to accept lower hours than they would ideally have liked,” said Mr Vosa.