UK Labour Market: A Stuck‑in‑Slow‑Motion Patchwork
Employment is flatlining
The latest Business Trends snapshot from BDO has you looking at the same old stats: the Employment Index dipped to 94.22 in June, barely nudging off a 13‑year low. It’s the same squeaky‑wheel feel as before, but the wheel keeps turning.
Services have been the bright spot—pumping out the little uptick that keeps businesses humming. Yet hiring is still on a reserve‑budget, with firms holding their recruitment plans hostage to the new National Insurance Contributions hit that rolled in April.
Salary‑packed pressure‑ball
Job crunch is on the up‑trend: in May, payrolls crashed by 109,000, almost twice the slump of April. Talk about a speed‑up to the “job‑flight” acceleration! Staffing cuts have become the new black‑tie rule for bosses.
Business confidence takes a raincheck
BDO’s Optimism Index has seen a dip to 91.58 (down from 92.30 last month). Tight labour costs and the looming threat of extra tax hikes in the Autumn are making managers wary. A handful of trade deals have admin‑boosted manufacturing, but the sector remains a roll‑er‑coaster with no obvious “free lunch.”
- Core costs keep margins in a tightening loop.
- Expected autumn tax hikes add a “let’s play it safe” vibe.
- Trade agreements provide a fleeting lift, but stress the volatile nature of manufacturing.
BDO forecasts that optimism will stay well below the long‑term giant through the back half of the year.
The sunrise in the summer economy
The BDO Output Index rose from 97.16 in May to 97.51 in June, marking two months of single‑handed progression. The hallmark driver is the services sector, with activity swelling to 97.75. Some wear‑off on inflation and a decline in trade uncertainty have nudged the Index. And let’s not forget the glorious June weather, which supplied a social‑media boost from Royal Ascot—probably nudging hospitality and leisure to rally.
Scott Knight’s “Hell’s Kitchen” perspective
Scott Knight, Head of Growth at BDO, offers a tongue‑in‑cheek take: “We’re witnessing early recovery vibes, mostly because services have been boosting the economy for a second month running. But, we all know good weather isn’t a permanent VIP pass. Companies are in a wait‑and‑see squad, pulling the plug on recruitment while hoping not to be torch‑burned. Without lower labour costs, clear state signals, and a solid policy backdrop, growth will remain on a muted rhythm.
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