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British American Tobacco plc : British companies' hiring set to slow: surveys

06/12/2012 | 04:31am US/Eastern

British employers expect to take on fewer new staff in the months ahead, a report by recruitment firm Manpower Group showed on Tuesday, chiming with another survey indicating that growth in permanent job placements slowed in May.

While the polls highlight the risk that the recent fall in unemployment will not last, they also show some unexpected resilience at a time when the economy is back in recession and the euro zone debt crisis is renewed fresh dangers.

"When you're going head to head with a return to recession at home and a burgeoning euro zone crisis, by rights the jobs market should be in free fall - but that's not what we're seeing," Manpower's UK managing director Mark Cahill said.

"Firms are still looking to hire, albeit at a weaker pace than before."

Manpower's seasonally adjusted employment outlook balance ticked down to +1 for the third quarter of this year from +2 in the second.

But Cahill warned that many companies were cautious because of the huge uncertainty about the euro zone. "It is a wait-and-see attitude," he told Reuters.

A survey from the Recruitment and Employment Confederation (REC) and consultancy KPMG showed that the number of permanent placements grew in May at the slowest pace so far this year and the number of vacancies also increased at a slower rate.

"Clearly the economic backdrop and the euro zone crisis are making some employers think twice before taking on new staff," said REC chef executive Kevin Green.

"Looking ahead, it's likely that unemployment figures will rise over the next few months as another wave of young people leave education," Green said. "We have a weakening jobs market which will only improve once demand returns to the economy."

Britain's economy fell back into recession around the turn of the year and while unemployment has fallen in recent months, the outlook remains tough as the government is axing hundreds of thousands of public sector jobs in its attempt to erase a huge budget deficit.

The quarterly Manpower survey showed hiring expectations worsened in four out of nine industry sectors for the third quarter compared with the second quarter. Of the four sectors that expected to take on new workers, financial services and utilities reported the strongest hiring intentions.

Manpower said this could be due to one-off factors, such as banks taking on staff to handle complaints related to the misselling of Payment Protection Insurance. In the utilities sector, hiring intentions may have received a boost from plans to construct a new power plant.

(Reporting by Sven Egenter and Fiona Shaikh)

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