Data released this week suggests that the momentum of UK employment growth is quite likely to slow down over the course of 2014. This is highly likely to have a significant effect on UK economic output throughout the course of the year.
The Chartered Institute of Personnel and Development’s (CIPD) quarterly labour market outlook included a survey of 1,000 top employers across the length and breadth of the British Isles. It revealed that many of them believe that the rapid expansion rate of UK employment rate is set to slow down over the course of the next few months, despite continued economic expansion throughout the UK.
Professionals from the companies surveyed further predicted that smaller companies are much more likely to hire new staff and expand than larger companies, according to data gathered from the quarterly outlook. Furthermore professionals expect higher rates of staff expansion in manufacturing than in services.
The quarterly outlook also gathered data to suggest that earnings growth is likely to stay muted; the figures show that average basic pay is predicted by increase by 2% over the current fiscal year. This prediction sees a rise from the 1.6% figures predicted during the last quarter of 2013.
This means that economists across the country have now gone out on record to predict that they see the unemployment rate holding steady at 7.1% over the course of 2014. This is a hold in the force of momentum for unemployment rate drops, as the rate dropped to 7.1% from 7.9% over the previous nine months.
This has led Mark Carney, Governor of the Bank of England to modify his plan to start raising interest rates from where they’ve been held at 0.5%, when unemployment hit the 7% mark. Carney is now taking broader economic factors into account to determine when national interest rates should be raised.
Gerwyn Davies, the CIPD’s labour market adviser has commented on the findings. Davies said that “employment growth, normally a lagging indicator of recovery, seems to have preceded the stronger signs of growth we’re now seeing.”
Davies then elaborated, saying that “it is unsurprising that employment intentions are now dipping just as economic growth seems to be taking hold, with employers needing to tackle the major productivity hangover affecting the UK economy.”
These findings could indicate a loss of momentum for the UK economic recovery. However only time will tell what impact, if any, these findings indicate on the rate of British economic recovery.