In this labour market update, Charlie Ball takes a look at the latest releases from the Bank of England and ONS, before highlighting some early analysis of the likely impact of recession on new graduates
The new UK Government issued a mini-Budget, but there was not a great deal that directly affects the graduate labour market. There were some measures to help investors in new start-ups, and some more detail on Enterprise Zones, but not a lot that specially affects new labour market entrants.
The Bank of England Agents delivered their influential quarterly Summary of Business Conditions:
- Agency contacts reported a modest slowdown in activity, with squeezed household incomes weighing on demand for some consumer goods and services. Output continued to be constrained by shortages of goods and labour in some sectors. But demand for business services and some manufactured goods remained robust.
- Companies reported that energy, pay and the weaker sterling exchange rate were becoming the main sources of cost pressures. Many contacts expected to continue to pass on higher costs into prices to protect margins, which remained squeezed.
- Food retailers continued to report customers trading down to cheaper goods and cutting back on non-essential items, such as confectionery. Discount chains continued to gain market share. Sales volumes of household items, such as furniture, electrical goods and home-improvement products continued to fall.
- Volumes of clothing and footwear sales were supported by demand for formal clothes as people returned to office-working. Contacts said that the heatwave boosted sales of summer clothing.
- Consumer services contacts reported that squeezed household incomes had weighed on demand. In hospitality, sales volumes were below pre-COVID levels and many pubs reported falling revenues, though demand for takeaways and fast food remained robust.
- Holiday bookings weakened, in particular for last-minute deals. Hotels and holiday park operators reported declines in on-site spending over the summer holidays, with off-peak bookings also lower than a year ago. Tourist venues said that visitor numbers remained below pre-pandemic levels
Contacts still wanted to retain skilled staff and said they would respond to weaker demand by slowing the pace of recruitment, reducing hours, redeploying staff or not replacing leavers.
- Contacts reported strong demand for financial services and legal advice, for example tax and wealth planning, equity release, debt consolidation and early repayment. Third sector organisations reported a large increase in demand for debt advice. In general, these contacts reported increasing demand for their services from people in employment as well as some in higher income brackets.
- Business services contacts continued to report strong annual growth in turnover, particularly in IT, recruitment services and consultancy. Within professional and financial services, investment banks and accountancy firms reported strong demand. Insolvency practitioners also reported a modest pickup in demand.
- In manufacturing, pharmaceuticals and healthcare, engineering, electronics, and suppliers of products for infrastructure and some types of commercial and industrial property development demand remained strong.
- Companies slowed the pace of their hiring plans overall. Contacts still wanted to retain skilled staff and said they would respond to weaker demand by slowing the pace of recruitment, reducing hours, redeploying staff or not replacing leavers. There was little evidence of firms actively reducing headcount due to economic uncertainty.
- Recruitment difficulties appeared to have peaked, with staff turnover lower than previously as employees became more cautious about changing jobs. However, companies continued to struggle to find staff and contacts in a wide range of sectors said that labour shortages were constraining growth. Many companies said that vacancy and attrition rates were higher than normal.
- Nominal wage inflation continued to increase, averaging around 6%, and a significant proportion of contacts said that they had given, or were considering giving, interim one-off payments to staff to help offset rising costs.
- There were some reports of companies bringing forward their annual pay settlements in anticipation of further expected increases in consumer price inflation. Companies were also reviewing their remuneration packages more broadly to find other ways to compensate staff (for example by allowing more remote-working to offset rising petrol costs, increasing paid leave entitlement, or offering private healthcare or pension contributions).
- The share of employees working from home has stabilised over recent months at around 20%. In August, 21% of hours were estimated to have been worked from home, 76% of employees worked on business premises, and 3% were unable to work (due to sickness, self-isolation, childcare, etc).
The latest rapid indicators of economic and social change are now available from the Office for National Statistics (ONS):
- Business and workforce indicators showed a mixed picture this week. Although total online job adverts increased 2% from the previous week, they are now 12% lower than the equivalent week of 2021 having exhibited a downward trend since the highest point this year in mid-February. Meanwhile, company incorporations are 3% lower than the equivalent week of 2021, but 16% higher than the equivalent week of 2019.
- Vacancies in manufacturing, construction, graduate training schemes, IT, engineering, science, HR, education and creative/arts and media are still ahead of pre-COVID levels, but only graduate and education remain above the same levels last year.
The ONS have also released results from their fortnightly business survey:
- Of trading businesses, more than a quarter (29%) expect the prices of the goods or services they sell to increase in October 2022, broadly stable with September 2022, with energy prices (46%) the most commonly reported reason for considering doing so.
- 30% of employees were working at home or in a hybrid way at the end of August, with 80% of IT employees and 65% of scientific and professional services staff working in a hybrid or remote way.
The Manpower Group have released the findings of their Q4 Employment Outlook Survey. ManpowerGroup interviewed 40,700 employers in 41 countries and territories on hiring intentions for the final quarter of 2022:
- Net Employment Outlook - calculated by subtracting the percentage of employers who anticipate reductions to staffing levels from those who plan to hire - now stands at +30%, down slightly (-3%) from Q3, yet 6% higher than this time last year.
- Organisations in the IT industry report the most optimistic outlook (+42%), followed closely by banking, real estate, and insurance (+37%).
- UK stands at +25, Ireland at +28.
The ONS have an ongoing project to assess how to measure Green jobs.
And HR Magazine have asked if a recession (which the Bank of England subsequently confirmed) is likely to affect the graduate labour market, with some quotes from names you may recognise. (By and large we don't see demand for graduates falling very dramatically)
The Irish Times asked the same question of Irish experts, with a similar set of responses.
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