Mixed economic fortunes on election eve
Posted by admin in Strategy & Planning on Tue, 04/05/2010 - 14:04
Some sectors of the economy bounced back in Q2 and the jobs market is steadying, but salaries remain low, according to the latest figures.
The UK manufacturing industry reported a strong start to the second quarter, with the weak pound boosting export growth to its fastest rate for at least 15 years.
The Purchasing Managers’ Index (PMI) rose to 58.0, the highest level since September 1994 and manufacturing production increased for the 11th month running in April.
Employment figures in the sector were up at the fastest rate since February 2007 following increased production and sales requirements.
“This performance of the UK manufacturing sector is hugely encouraging as it is proving surprisingly resilient. It is now growing at a rate of knots - maintaining the momentum gained in Q1 and faring much better than we could have dared hope for this time last year,” said David Noble, chief executive officer at the Chartered Institute of Purchasing & Supply.
“The real turning point will come when manufacturers feel confident enough to increase their investment and start to build capacity again. The good news is there are already signs this is starting to happen as employment levels are slowly rising on the back of strained capacity and backlogs of work reported for the first time in over a decade.”
Employment figures in the wider economy remained steady in April, but average salaries on offer were 4% lower than this year’s high point so far in February and slipped below last year’s level – according to the Reed Job Index published this week. Salaries in the financial services sector were 5% below December’s level.
Demand for workers held up in some regions, with East Anglia, North East England, the South East (excluding London) and Scotland all remaining above last year’s levels. However job demand in London itself, which up to now has consistently outperformed the rest of the country, dropped back for the first time below last year’s levels.
“The UK is not yet out of the woods of the economic downturn,” commented Steve Webb, Liberal Democrat shadow secretary for work and pensions. “We need to invest in a green jobs package which will encourage employers to take on more staff. This will support the economy now and build our infrastructure for the long-term.”
“While employer demand for new workers has stayed steady this month, across the economic scene the index figures offer more signs of nervousness than confidence at the moment,” said Martin Warnes, managing director of reed.co.uk.
“Salaries are trending downwards, even in areas where demand for staff seems particularly buoyant, and demand for workers in London has dropped below last year’s levels for the first time since the index began. However, the predominant trend is level with last month. Employers seem to be waiting to see the outcome of the general election, so they can factor the result into their forward plans for jobs,” he added.
The Bottom Line:If Mr Cable has his way...
"If Mr Cable had his way, all the big banks would be broken up and bonuses would be virtually eliminated - a sure-fire way in my view of guaranteeing an end to the UK’s ability to compete as an international financial centre. Let’s not forget that this is a man who is on record as saying that everyone who works in a bank has an ‘aristocratic lifestyle’ clearly demonstrating his lack of understanding of the sector." A tough line on bankers’ bonuses could make a brain drain of financial talent a distinct possibility, warns Paul Marsden. Read more