Britain firmly on path away from recession as hiring and growth ramp up
Britain seems almost certain to dodge a recession this year as two new surveys out today reveal businesses are hiring at the strongest pace in half a year and families are upbeat about their finances.
Numbers from Lloyds Bank show nearly every sector of the UK economy stepped up headcount last month.
Hiring was led by estate agents and software companies, the lender said.
Its monthly employment survey showed ten of the 14 sectors it tracks took on more staff over the last month, signalling the UK jobs market is holding up pretty well despite the economic slowdown.
The survey also indicates hiring picked up after wobbling at the beginning of the year.
Numbers from the Office for National Statistics earlier this week for the three months to March showed unemployment nudged up to 3.9 per cent, vacancies fell and payrolled employees dropped 136,000, the first decline since early 2021 when the UK was in the teeth of Covid-19 prevention measures.
Jeavon Lolay, head of economics and market insight at Lloyds Bank Corporate and Institutional Banking, said the data shows “hiring activity is firming again as, alongside a pick-up in activity levels and improving confidence, many businesses reported that it was easier to recruit staff”.
Across all the 14 sectors monitored by the bank, growth expectations reached their highest level in 13 months at 71.4 points, far above the 50 point threshold that separates growth and contraction.
Around seven in ten companies clocked an increase in activity last month, chiming with purchasing manager indexes and other more timelier surveys that suggest official gross domestic product figures from the ONS will reveal the economy grew in April after contracting 0.3 per cent in March.
Separate research from insight company Growth for Knowledge (GfK) found consumer confidence – seen as a proxy for how keen households are to spend – jumped for the fourth month in a row to minus 27 points this month from minus 30 points.
That rise was mainly driven by a five point uptick in households’ optimism in their personal finances over the coming year and a four point improvement in their economic outlook.
Bullishness over personal finances “most keenly reflects our hopes and fears for the coming year, and it underpins our ability to spend on goods and services that drive our economy,” Joe Staton, GfK client strategy director.
Economists at the turn of the year had warned of the UK suffering the longest recession in a century, wiping around three per cent off of GDP. That slump was expected to be fashioned by a huge real income shock caused by inflation trimming consumer spending.
But, a combination of the government extending energy bill support and decent wage growth – though still lagging inflation by around four percentage points – has kept spending higher than projected, keeping GDP in positive territory in the first three months of this year.