With the Bank of England deferring a decision on raising interest rates in May, the UK economy seems to be recovering from the slowdown seen in the first quarter of the year. A strong performance seen across all the major sectors has raised expectations that the monetary policy committee would now vote for a rate rise in August.
This week’s UK labour market data was expected to further confirm this forecast, but it is still not yet clear.
The latest ONS figures show that unemployment held steady at a low 4.2%, with 137,000 jobs created over the three months leading up to May. However, the number of people claiming out-of-work benefits rose unexpectedly by almost 8,000 and wage growth dipped slightly in the three months to May, to 2.7% excluding bonuses (2.5% without).
These mitigated results, combined with recent reports of jobs losses in the retail sector and ever-growing uncertainties around Brexit and the trade relations with the EU, mean there is a real chance that the Bank of England will wait for firmer signals that the economy is on the right track before risking raising borrowing costs again.
If economists are divided over a potential interest rates rise, there is plenty businesses can do to prepare for when it actually happens but compromising on labour is very risky. If a business improves its staff salary and benefits package to attract new workers when rates are low, it can’t just back out when rates rise again.
This is why employers need to take extra care in choosing the right candidates, with the right skillset, from the very start. Recruiting, hiring and training takes time and money, and a bad hire can cause serious problems for organisations.
Planning ahead by developing bespoke recruitment strategies with expert recruiters, is the best way for companies to maximise productivity and profitability in a durable way.
On a national scale, we also need to continue our efforts to address the skills shortage we’re seeing across the UK, which further complicates the task of recruiting and has contributed to significantly increasing pay rates in some sectors such as in IT and construction.
So, whilst the latest job figures remain positive we must not become complacent. At Acorn we’re continuing to work very closely with employers to offer strategic advice and launch new initiatives to attract the skills they require to address productivity and to support business growth.