Dodd: 2013 predictions tough to make for recruitment industry
7 December 2012
Following Chancellor George Osborne’s Autumn Statement earlier this week, Sue Dodd, director of recruitment industry analysis firm Agile Intelligence, tells Recruiter that the general economic uncertainty makes it difficult to make accurate predictions for the turnover of UK recruitment industry next year.
Mon, 10 Dec 2012
Following Chancellor George Osborne’s Autumn Statement earlier this week, Sue Dodd, director of recruitment industry analysis firm Agile Intelligence, tells Recruiter that the general economic uncertainty makes it difficult to make accurate predictions for the turnover of UK recruitment industry next year.
“With all the uncertainty just now, I think it is too early to give a precise forecast for industry turnover in 2013. At this stage I would say that turnover could range between plus 8% and minus 10%,” she says. Dodd expects 2012 turnover to rise by between 2% and 3%.Figures from the Recruitment & Employment Confederation issued in November calculated 4.3% growth for recruitment in the year ending April 2012, and suggests further growth of over 5% by the end of the 2013/14 financial year.
Commenting on the Autumn Statement and prospects for the recruitment sector, Dodd writes:
Overall the statement presents a fairly gloomy picture of UK prospects but does offer some specific positives amidst an even more protracted economic recovery than previously forecast. Despite the leaks and the hype the statement did still offer a few surprises. None more so than news from the Office of Budget Responsibility (OBR) that borrowing is actually falling, albeit helped downwards by a projected £3.5bn injection from 4G auction proceeds while likely windfalls from a Swiss off-shore tax agreement are also factored into public finances for next year.
This was music to the Treasury’s ears especially as the recession has now proved deeper and the recovery slower than they previously anticipated. On this note, GDP growth will remain painfully slow - forecast to decline by 0.1% this year (consensus nearer -0.3%), rise 1.2% in 2013, reaching 2% in 2014 and picking up very slowly to reach just 2.8% in 2017.
As warned by the Bank of England recently there is even prospect of a temporary triple dip recession driven by the exceptional features of the 2012 quarterly progression (Jubilee, Olympics etc) and the very slow underlying upturn. Q4 is now expected to decline slightly versus a strong Q3, but recession would only be called if Q1 2013 proved negative too.
More positively, the rate of unemployment in 2012 proved to be 0.7% below the previous estimate at around 8% yet the OBR still expects it to peak a little higher at 8.2% in 2012 and 2013 – nevertheless still signalling a far stronger labour market than any economists had projected. So status quo in the workforce should be mainly unchanged, with some slight deterioration through the next few years projected by the OBR in unemployment despite continued net job creation. The unexpected relative strength of the labour market has taxed economists through this latest recession and, given that job creation has been possible so far, there is little here that would suggest a change of fortunes, although the cumulative effect of the consumer squeeze may begin to impact even harder upon some sectors such as retail.
There were also some limited fiscal measures to try to boost the economy. Help for corporate UK in general came in the form of a 3% reduction in corporation tax, but for manufacturing and the knowledge economy in particular there was a substantial increase in capital allowances to £250k (a reversal of previous policy) and a £600m boost for science research infrastructure, with additional funds also for space technology. This latter follows a strong pattern of investment in science facilities but is quite specifically targeted, so will not benefit the whole scientific community.
Nevertheless the rising proportion of scientific and engineering jobs over the past few years is increasingly seen as a testament to the changing emphasis of the UK economy.
The most potent announcement was the £5bn investment in infrastructure projects over the next few years, albeit funded from proposed government department cuts on current expenditure. This is intended to kickstart some construction projects, while also addressing infrastructure weaknesses across the country. The plans mainly span road, rail and schools and can only be positive for employment and the wider economy but are dependent upon those savings being found in central government. More details are required to assure us that all of this investment will indeed be fresh and not include recycled announcements – not that we are cynical!
Both the construction and science funding underpin existing demand for suitable candidate skills and should encourage additional hiring, especially in the ‘built environment’. However, the overall health of the economy is paramount and that remains provisionally on the sick list, with many factors outside the UK bearing influence, not least of course the weakness of the Eurozone. Perhaps, given the underlying long-term problems of our major trading partner, reduced outlook for exports and the fragile condition of parts of the UK economy, we should be grateful if austerity only lasts to 2018.
On the recruitment front, if employment is rising, unemployment falling and some economic growth exists then opportunities to do business will present themselves but those looking for a quick recovery either from the economy or the recruitment market must learn to dig in for much longer.
Agile Intelligence forecasts industry turnover growth of 2% and 3% in 2012 followed by a muted but still fluid projection, which could even yet prove negative overall for 2013, although there will certainly be at least several pockets of real growth. Furthermore, with much of the recent growth generated by managed services, the prospect for margin (net fees) progression remains dampened overall.
Following Chancellor George Osborne’s Autumn Statement earlier this week, Sue Dodd, director of recruitment industry analysis firm Agile Intelligence, tells Recruiter that the general economic uncertainty makes it difficult to make accurate predictions for the turnover of UK recruitment industry next year.
“With all the uncertainty just now, I think it is too early to give a precise forecast for industry turnover in 2013. At this stage I would say that turnover could range between plus 8% and minus 10%,” she says. Dodd expects 2012 turnover to rise by between 2% and 3%.Figures from the Recruitment & Employment Confederation issued in November calculated 4.3% growth for recruitment in the year ending April 2012, and suggests further growth of over 5% by the end of the 2013/14 financial year.
Commenting on the Autumn Statement and prospects for the recruitment sector, Dodd writes:
Overall the statement presents a fairly gloomy picture of UK prospects but does offer some specific positives amidst an even more protracted economic recovery than previously forecast. Despite the leaks and the hype the statement did still offer a few surprises. None more so than news from the Office of Budget Responsibility (OBR) that borrowing is actually falling, albeit helped downwards by a projected £3.5bn injection from 4G auction proceeds while likely windfalls from a Swiss off-shore tax agreement are also factored into public finances for next year.
This was music to the Treasury’s ears especially as the recession has now proved deeper and the recovery slower than they previously anticipated. On this note, GDP growth will remain painfully slow - forecast to decline by 0.1% this year (consensus nearer -0.3%), rise 1.2% in 2013, reaching 2% in 2014 and picking up very slowly to reach just 2.8% in 2017.
As warned by the Bank of England recently there is even prospect of a temporary triple dip recession driven by the exceptional features of the 2012 quarterly progression (Jubilee, Olympics etc) and the very slow underlying upturn. Q4 is now expected to decline slightly versus a strong Q3, but recession would only be called if Q1 2013 proved negative too.
More positively, the rate of unemployment in 2012 proved to be 0.7% below the previous estimate at around 8% yet the OBR still expects it to peak a little higher at 8.2% in 2012 and 2013 – nevertheless still signalling a far stronger labour market than any economists had projected. So status quo in the workforce should be mainly unchanged, with some slight deterioration through the next few years projected by the OBR in unemployment despite continued net job creation. The unexpected relative strength of the labour market has taxed economists through this latest recession and, given that job creation has been possible so far, there is little here that would suggest a change of fortunes, although the cumulative effect of the consumer squeeze may begin to impact even harder upon some sectors such as retail.
There were also some limited fiscal measures to try to boost the economy. Help for corporate UK in general came in the form of a 3% reduction in corporation tax, but for manufacturing and the knowledge economy in particular there was a substantial increase in capital allowances to £250k (a reversal of previous policy) and a £600m boost for science research infrastructure, with additional funds also for space technology. This latter follows a strong pattern of investment in science facilities but is quite specifically targeted, so will not benefit the whole scientific community.
Nevertheless the rising proportion of scientific and engineering jobs over the past few years is increasingly seen as a testament to the changing emphasis of the UK economy.
The most potent announcement was the £5bn investment in infrastructure projects over the next few years, albeit funded from proposed government department cuts on current expenditure. This is intended to kickstart some construction projects, while also addressing infrastructure weaknesses across the country. The plans mainly span road, rail and schools and can only be positive for employment and the wider economy but are dependent upon those savings being found in central government. More details are required to assure us that all of this investment will indeed be fresh and not include recycled announcements – not that we are cynical!
Both the construction and science funding underpin existing demand for suitable candidate skills and should encourage additional hiring, especially in the ‘built environment’. However, the overall health of the economy is paramount and that remains provisionally on the sick list, with many factors outside the UK bearing influence, not least of course the weakness of the Eurozone. Perhaps, given the underlying long-term problems of our major trading partner, reduced outlook for exports and the fragile condition of parts of the UK economy, we should be grateful if austerity only lasts to 2018.
On the recruitment front, if employment is rising, unemployment falling and some economic growth exists then opportunities to do business will present themselves but those looking for a quick recovery either from the economy or the recruitment market must learn to dig in for much longer.
Agile Intelligence forecasts industry turnover growth of 2% and 3% in 2012 followed by a muted but still fluid projection, which could even yet prove negative overall for 2013, although there will certainly be at least several pockets of real growth. Furthermore, with much of the recent growth generated by managed services, the prospect for margin (net fees) progression remains dampened overall.
