This article is more than 9 months old

This article is more than 9 months old

Employers in Britain have “hit the pause button” on job hiring, according to a survey of the labour market that shows demand for new workers has tumbled to a seven-year low.

ManpowerGroup said years of strong jobs growth had ended in 2019 as Brexit uncertainty and a slowdown in global trade took their toll on business confidence.

The recruitment firm’s survey of 2,101 employers found the outlook for the first quarter of 2020 was weak with hiring intentions by firms in London at a 10-year low.

A balance of companies, when asked whether they intended to hire additional workers or reduce the size of their workforce in the coming quarter, registered +2%, the lowest figure since 2012.

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London, which has among the largest number of employers and usually offsets poor figures from the UK’s regions, was among the worst affected after hiring intentions dropped five percentage points from the fourth quarter to -1 for the first three months of 2020.

However, the east Midlands, described by the survey as a “bastion of positivity for many years”, fared even worse: employer hiring confidence fell 15 percentage points to -2%, its lowest level in more than a decade. Wales dropped to -1%, Yorkshire and the Humber hit -1% and the north-east declined to -4%.

ManpowerGroup said the normally buoyant market for workers in London’s financial sector began to dry up in the summer and had contracted ever since, particularly among accountancy and law firms that once aggressively recruited staff.

The report, which is used as a key economic indicator by the Bank of England and the Treasury, says: “Declining levels of confidence in almost every sector and region paints a sluggish picture for the start of 2020, with only a few bright spots.”

Official surveys have found that hiring has stalled and wage growth has begun to decline as firms said they were preparing for the threat of a no-deal Brexit and a slowdown in trade amid the US-China dispute over import tariffs.

The Office for National Statistics said in a report covering the three months to September that employment had fallen by 58,000 – the biggest drop since May 2015.

Chris Gray, the director of ManpowerGroup’s UK division, said: “Employers are hitting the pause button after many years of strong hiring. Signs of a slowing global economy, a general election and a lack of clarity about Brexit are weighing heavily on the minds of employers leading to many hiring plans being put on ice.

“Employers want certainty before they can make investment decisions and firm up hiring plans.”

Gray said employers continued to complain about skills shortages among engineers, IT staff, trades people, customer service representatives and medical professionals, with “little sign of them easing in the foreseeable future”.

A better than expected increase in hiring intentions across the West Midlands followed a resurgence in manufacturing and broader growth across the main cities around Birmingham.

The balance of firms reporting improved confidence increased by two percentage points to +13%. Manpower said while some sectors of the car industry were struggling, there was an increase in investment across the aerospace, trains, defence and shipping components supply sectors.

“We’re seeing an increase in investment in skills in the automotive sector and its supply chain focused particularly on electric vehicles and new technologies,” Gray said.

“One factor here is the ‘Greta Thunberg effect’, which is speeding up the demand for electric cars. The challenge will be filling the gaps – many employers are reporting difficulties finding skilled staff, and wage inflation is also driving up costs.”