Firing on all cylinders? Boring! - City Comment
7 November 2013
The message about the economy is almost becoming boring now. Momentum continues to build, and economic recovery is now moving at a faster pace than most forecasters had predicted.
Thu, 7 Nov 2013 | By Sue Dodd, director, Agile IntelligenceThe message about the economy is almost becoming boring now. Momentum continues to build, and economic recovery is now moving at a faster pace than most forecasters had predicted.
Since Q1 2013, albeit still subject to revision, the six months of quarter on quarter growth totals 1.5%, unemployment has fallen, the claimant count reduced by 177,000 and official figures of job vacancies rose by over 7%. While there’s still a long way to go before the labour market normalises, with tough regions and high youth unemployment to tackle, the broad trend is definitely in the right direction and the underlying influences which will sustain this improvement appear mainly to be heading that way too.
Perhaps most encouraging now is the nature of the economic recovery. GDP comprises four main industrial sectors and all four contributed to the 0.8% preliminary estimate of growth in Q3 versus Q2.
What is forever referred to as the “all important” services sector is weighted at 77.8% of the UK economy and was ahead 0.7%, while production rose 0.5% and crucially now construction added 2.5% as both private housing and commercial new work grew following a torrid couple of years.
Once firing on all four cylinders, it becomes easier for the economy to take minor knocks as it goes, and even within these sectors there are now positive signs that the upturn is becoming widespread. Production includes manufacturing, which has risen 0.9% for two consecutive quarters, although other production constituents can prove quite volatile and often weather or price sensitive (energy, oil & gas, water). Construction is split across residential and commercial gains and there are even rumblings about potential housing market over-heating if current trends prove persistent.
Services are themselves split into four key areas with the ‘distribution, hotels & restaurants’ segment rising strongly, ‘business services and finance’ likewise, while both the ‘transport, storage & communications’ segment and ‘government services’ were each modestly ahead.
Interestingly, as we read so much about the revival in engineering and shortage of skills, while only a snapshot, the largest increase within the 1% quarter-on-quarter growth posted by ‘business services and finance’ came from architectural and engineering – a real indication that designs are in demand whether for technical engineering or construction projects.
One look at the experiences of the technical recruiters and also the latest from construction & property specialists will tell you that they had this trend tagged several months ago. Some would say that the whole recruitment industry behaves similarly and as a forward indicator it can certainly be revealing and at specific sector level it can become compelling.
Reading the latest from the REC Recruitment Industry Trends Survey, it would be easy to look at a turnover growth rate of just 3.1% and think that the recovery is all smoke and mirrors, but bear in mind that the survey only takes us to March 2013 and the recovery has been at its strongest since then. Hence the prediction that the industry will exceed pre-recession levels in 2014.
See next week’s November edition of Recruiter for more fruits of Dodd’s labour, the 2013 Recruiter HOT 100 ranking of the UK recruitment firms with the greatest gross profit per employee, sponsored by Flo Software Solutions and supported by RBS.
Since Q1 2013, albeit still subject to revision, the six months of quarter on quarter growth totals 1.5%, unemployment has fallen, the claimant count reduced by 177,000 and official figures of job vacancies rose by over 7%. While there’s still a long way to go before the labour market normalises, with tough regions and high youth unemployment to tackle, the broad trend is definitely in the right direction and the underlying influences which will sustain this improvement appear mainly to be heading that way too.
Perhaps most encouraging now is the nature of the economic recovery. GDP comprises four main industrial sectors and all four contributed to the 0.8% preliminary estimate of growth in Q3 versus Q2.
What is forever referred to as the “all important” services sector is weighted at 77.8% of the UK economy and was ahead 0.7%, while production rose 0.5% and crucially now construction added 2.5% as both private housing and commercial new work grew following a torrid couple of years.
Once firing on all four cylinders, it becomes easier for the economy to take minor knocks as it goes, and even within these sectors there are now positive signs that the upturn is becoming widespread. Production includes manufacturing, which has risen 0.9% for two consecutive quarters, although other production constituents can prove quite volatile and often weather or price sensitive (energy, oil & gas, water). Construction is split across residential and commercial gains and there are even rumblings about potential housing market over-heating if current trends prove persistent.
Services are themselves split into four key areas with the ‘distribution, hotels & restaurants’ segment rising strongly, ‘business services and finance’ likewise, while both the ‘transport, storage & communications’ segment and ‘government services’ were each modestly ahead.
Interestingly, as we read so much about the revival in engineering and shortage of skills, while only a snapshot, the largest increase within the 1% quarter-on-quarter growth posted by ‘business services and finance’ came from architectural and engineering – a real indication that designs are in demand whether for technical engineering or construction projects.
One look at the experiences of the technical recruiters and also the latest from construction & property specialists will tell you that they had this trend tagged several months ago. Some would say that the whole recruitment industry behaves similarly and as a forward indicator it can certainly be revealing and at specific sector level it can become compelling.
Reading the latest from the REC Recruitment Industry Trends Survey, it would be easy to look at a turnover growth rate of just 3.1% and think that the recovery is all smoke and mirrors, but bear in mind that the survey only takes us to March 2013 and the recovery has been at its strongest since then. Hence the prediction that the industry will exceed pre-recession levels in 2014.
See next week’s November edition of Recruiter for more fruits of Dodd’s labour, the 2013 Recruiter HOT 100 ranking of the UK recruitment firms with the greatest gross profit per employee, sponsored by Flo Software Solutions and supported by RBS.
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