Britain’s economy looks set to shed jobs in the third quarter as companies’ hiring is unlikely to counterbalance public sector cuts, with firms more cautious about taking on new staff in the face of growing global economic headwinds, a survey showed yesterday.
The quarterly survey of more than 1,000 employers from the Chartered Institute of Personnel and Development (CIPD) and accountants KPMG showed that manufacturers in particular had scaled back their plans to take on additional staff.
“Increasing uncertainty about growth prospects in both the UK and global economies is now affecting hiring intentions; -particularly in those industries such as manufacturing that stand to lose most in the event of a global slowdown,” said Gerwyn Davies, public policy adviser at the CIPD.
“This will concern the government as it attempts to rebalance the economy towards exports and investment,” he added.
The government is banking heavily on the private sector to create new jobs as public spending cuts are kicking in. So far, the labor market has been surprisingly robust, given meager overall economic growth and employment has risen by about 500,000 over the past year.
The CIPD/KPMG net employment index turned negative again, falling to minus 1 from +3 recorded for the past three months.
“Long-term prospects are even worse, with the twelve-month employment index falling to -6 from +2 last quarter,” the CIPD said.
However, the near and long-term index are both still above levels hit in the survey published in February.
Official unemployment numbers are due tomorrow and economists expect a rise of 20,000 in claimant numbers for last month and a stable unemployment rate of 7.7 percent in the three months to June.
The Bank of England cut its growth forecast for the economy to about 1.4 percent for this year and Bank of England Governor Mervyn King warned last week that headwinds for Britain’s economy were growing by the day.
Separately, the chances of the US economy slipping into another recession have risen significantly and now stand at 30 percent, USA Today reported late on Sunday.
Citing its quarterly survey of 39 top economists, the newspaper said the chance of another downturn was now twice as high as three months ago.
That means another shock to the fragile economy — such as more stock market declines or a worsening of the European debt crisis — could push the nation over the edge, the report said.
Even if the US avoids a recession, the economists see economic growth at a sluggish 2.5 percent next year, down from 3.1 percent in April’s survey, the paper said.
The jobless rate will fall slowly, dipping only to 8.8 percent in the next 12 months, it said.