Monday 8th April, 2013

According to the latest Business Trends report the BDO’s Employment Index has hit a 19-month high, indicating a resurgence in private sector hiring intentions.

BDO's Employment Index, measures UK businesses’ hiring intentions over the next two quarters, found it reached 96.0 in March, the highest since August 2011.

March is the third consecutive month that the index has been at or above the crucial 95.0 level that indicates employment growth. This suggests that UK businesses will help to offset the effects of expected public sector job cuts, providing a timely boost for the nation’s ailing economy.

Despite this, UK businesses still do not anticipate economic growth in the next two quarters. BDO’s Output and Optimism indices - predict short-run turnover expectations and business performance a quarter and two quarters ahead, sit at just 93.0 and 92.2 respectively, below the (95.0) level that indicates growth.

More encouragingly, service sector confidence moved up substantially this month, with optimism increasing to 93.2 and output rising to 93.2 from 91.5 last month. While these March indices are still below the 95.0 mark, optimism in the sector is now at its highest point since October 2012.

By contrast, the manufacturing sector’s data continued to decline. Optimism for manufacturers plummeted to 88.2 this month, while the BDO Output Index also fell, from a reading of 94.1 to 92.4.

Peter Hemington, Partner, BDO LLP, commented: "It is encouraging to see improvement in UK businesses’ hiring intentions, particularly in light of the imminent public sector payroll cuts which will add pressure to the unemployment rate."