Employers’ confidence in the UK economy remained negative for the sixth consecutive month, according to the latest Recruitment and Employment Confederation’s JobsOutlook report.

The net balance of those seeing a positive outlook as opposed to a negative one reached -14 in January, and was the joint-lowest since June 2016.

The further drop in confidence in economic prospects coincides with employers’ confidence in making hiring and investment decisions declining by 5% to net: +8, when compared to the previous month and was the lowest recorded since February 2018 and the joint-lowest since June 2016.

Neil Carberry, Chief Executive of the REC, commented, “The business community is united in wanting a no deal Brexit off the table. This avoids significant damage to our economy and helps to restore business confidence.  The UK jobs market has been incredibly resilient but it cannot defy the effects of deep uncertainty indefinitely. Today’s data shows businesses’ confidence in investing has fallen dramatically – a clear sign of the dampener that no deal would put on business growth.”

“We’ve been clear. The UK needs a clear transition period and a sensible approach to EU immigration to be written into the deal. That would go a long way to allaying economic fears,” Carberry said.

Despite a fall in confidence in making hiring decisions, forecast demand for permanent employees in the short-term increased by 7% and in the medium term by 14%, compared to the same time last year.

More than half, or 53%, of UK employers who hire permanent staff expressed their concern this quarter over the sufficient availability of candidates for permanent jobs, up from 44% a year earlier, with anticipated shortages of health and social care workers causing most anxiety for employers. Hospitality and engineering & technical workers were the other two professions where employers expect severest skills shortages.

Forecast demand for temporary recruitment showed that in the short-term, the balance of employer sentiment to hire on a temporary basis fell 10% from the previous month to +3, down 4% from the same time last year. In the medium-term, the balance of employer sentiment towards agency worker hiring tipped into negative territory in January, falling 11% to net: -1 from the previous month. This is 6% lower than in the same period last year.

Despite the decline in anticipated demand for temporary agency workers during the quarter ended December 2018, 47% of employers intending to hire temporary workers expressed concerns over the sufficient number of agency workers with the necessary skills they require, up from 36% last year. Employers are expecting the most severe skills shortages among drivers for the third successive month, followed by industrial and education sectors.

Meanwhile, the contrast between private (52%) and public sector sentiment (18%) also remains noteworthy as the former now needs to address the IR35 reforms scheduled for April 2020.

REC’s data also found that more employers of temporary workers reported that agency workers are important for managing uncertainty in their organisations, up 15% compared with the same period last year.