Hiring sentiment reflects diverging economies on either side of the pond

Fri, 27 Jan 2012

The diverging trajectories of the UK and US economies were reflected in figures released by staffing industry trade bodies on either side of the pond.

With the US showing signs of recovery, staffing employment in the world’s largest economy was 4% up in January compared with the same month a year ago, according to the American Staffing Association (ASA) Staffing Index. 

Some economists forecast that figures released later today will show US gross domestic product expanded at a 3% annual rate in the fourth quarter, up from 1.8% in the third.

Although the ASA index for January of 86, down seven points from the 93 reported for December, indicated that US staffing employment decreased 7.5% over the past month, the ASA points out that staffing employment is typically lowest during January and grows throughout the year, usually peaking in December. The Index shows employment trends in temporary and contract employment, compared to a base reference index 100 recorded in June 2006.

While the ASA figures reflect a degree of optimism and confidence among hirers in the US, the Recruitment & Employment Confederation’s (REC) January Jobs Outlook survey, which tracks future hiring intentions rather than actual placements, confirms that many employers are now waiting for an upturn in economic prospects before they commit to growing their workforce.

This sentiment is unlikely to have been improved by news this week that the UK economy shrank by 0.2% in the final quarter of last year.

Although 63% of respondents said they expected to increase their workforce in the short-term, this reflected a two-point drop over the month.

However, demand for temporary staff remained firm, with 27% of employers planning to increase their use of agency workers in the immediate future, with another 57% saying theirs would remain at the same level.

Commenting on the figures Roger Tweedy, the REC’s director of research, says: “Last November’s figures showed that many employers were hoping to slightly increase their permanent workforces early in the New Year. However, there has been a significant dip in employer optimism that is likely to be linked to continuing economic concerns over the sovereign debt crisis in the Eurozone.

“Most employers have retrenched to a much more cautious ‘wait and see’ approach, which is starting to be reflected in the REC’s Employer Confidence Barometer index, which fell back one point from the month before.

“However it is important to note that this confidence index is still five points above its lowest mark last September and that a significant number of businesses still plan to take on new staff during the course of year, despite the slight change in mood.”