Employers’ confidence in the UK economy fell 6% in the quarter ending January 2019, when compared to the previous quarter. At the same time, employers’ confidence in making hiring and investment decisions declined by 3%. Both barometers reached the lowest level recorded since June 2016, according to the Recruitment and Employment Confederation’s latest JobsOutlook survey.

The net score for employer confidence stood at -20 while the score for employers’ confidence in making hiring and investment decisions tumbled to net 5.

Alongside the fall in confidence in making hiring decisions, forecast demand for permanent employees in the short-term fell by 4% to net 17, and in the medium-term fell by 6% to net 25, compared with the previous month. The net scores were 3% and 9% higher, respectively, than in the same period last year. 

In the short-term, the balance of employer sentiment to hire agency workers on a temporary basis fell by 9% from the previous month to net -6, returning to negative territory for the first time since November 2017.

In the medium term, the balance of employer sentiment towards agency worker hiring on a temporary basis dropped 6% from the previous month to net: -7, remaining in negative territory for a second successive month. This was 10% lower than in the same period last year, the lowest since records began in June 2016.

Following this quarter’s decline in anticipated demand for temporary workers, 25% of employers intending to hire temporary workers expressed concern over the sufficient number of agency workers with the necessary skills they require, down from 32% a year earlier.

Employers are expecting the most severe skills shortages among sales and retail workers, followed by the education and engineering & technical sectors.

REC also noted in its report that 82% of employers have either little or no surplus workforce capacity, including 88% of the UK’s largest (250-plus employees) enterprises and 93% of public sector bodies.

 “With only a month before Britain is due to leave the EU, businesses across the country are clear that they need clarity about the plan for after the end of March,” REC Chief Executive Neil Carberry said. “That must mean a smooth move to a Brexit deal — not a dangerous no-deal experiment. A sensible approach will underpin strong growth in jobs, which UK employers have a record of delivering, including in the survey we publish today.”

Carberry continued, “recruiters are helping employers to find the staff they need, especially in key sectors of shortage, like engineering, healthcare and hospitality. But with employers’ confidence levels at a low point and hiring intentions for both permanent and temporary staff dropping in today’s survey, there can no longer be any argument — uncertainty is damaging for job creation.”