Employers’ confidence in the UK economy dropped to its lowest level on record which has led to increased hiring intentions for temporary agency workers, according to the latest Recruitment and Employment Confederation’s JobsOutlook report covering the period from January to March 2019.

The report showed that employers’ confidence in economic prospects for the UK dropped by 3% from last month to net: -31. This is the lowest level since the JobsOutlook survey began measuring sentiment about the economy among UK businesses in June 2016.

However, the report also showed that the balance of sentiment for hiring agency workers in the short-term was 10% higher than the previous month at net: +3. Sentiment in the medium term was at net: +1, up 9% from the previous month.

Neil Carberry, Chief Executive of the Recruitment & Employment Confederation, commented, “The more positive figures on hiring for temporary workers suggest that many businesses are turning to agency work to help them navigate the unpredictability they currently face. This might be driven by waiting to see whether permanent hiring is justified, or by using additional labour to meet demand rather than making big capital investments. In the long run, however, employment will be best supported by the stability a clear Brexit outcome will bring. It’s time to get on with delivering this.”

Meanwhile, employers’ confidence in making hiring and investment decisions in their own businesses stood at net: -4. This was a fall of 3% from the previous month and the second consecutive month that this measure has been in negative territory.

“These figures emphasise again how Britain’s fantastic jobs market supports prosperity, given an uncertain economic outlook and lower business investment. Firms are only marginally less confident in hiring for themselves in today’s survey – and far more positive than they are about the wider economy. Given recent political events, these figures are remarkably robust,” Carberry said.

The balance of sentiment towards permanent hiring was up from last year. More employers planned to increase than reduce their permanent headcount in the short-term (net: +16). This was up by 3% year-on-year. In the medium-term, the balance of sentiment was net: +19.

The report also showed that 80% of employers continued to indicate that they either had no surplus workforce capacity (39%) or such a small amount that they may need to increase headcount if demand increased (42%).

Nearly half, or 46%, of UK employers expressed concern over the sufficient availability of candidates for permanent hire. This was up 5% from 41% in the same period last year.

Meanwhile, 34% of employers using temporary agency workers expressed concern about their sufficient availability. They were most likely to expect shortages of Construction, Driving and Engineering & Technical workers.