The UK job market has until now been relatively resilient, with a record number of people are currently in work.
However, tracking hiring intention offers some cause for concern. BDO’s Employment Index reveals that businesses are holding back on hiring more staff, with data showing a pattern of decline for two consecutive months.
Overall business confidence is falling, and according to BDO’s Optimism Index is at its lowest point since December 2016.
The dip in optimism is felt the hardest in manufacturing businesses. Recent high-profile relocations in the sector, including Nissan and Jaguar Land Rover, signal some of the wider issues in the market as well as in manufacturing.
The services sector saw an increase last month, which contributed to overall UK output. Still, BDO’s Output Index stands below the long-run average, at 98.32 in February.
Peter Hemington, partner at BDO, pointed out that the flexible labour market of pre-Brexit Britain was a major benefit to the economy.
“Unfortunately”, Hemington adds, “the uncertainty created by Brexit is bringing this trend to a halt, with hiring intentions sharply down over the last two months.
“In almost any [post-Brexit] scenario, we need to see higher levels of investment by companies to ensure that a smaller number of employees are more effective as they go about their work,” he said.