Employment rebounds after 15-month decline despite continued uncertainty weighing on businesses
Employment rebounds after 15-month decline despite continued uncertainty weighing on businesses
Employment rebounds after 15-month decline despite continued uncertainty weighing on businesses
Following 15 months of continuous decline, it’s longest fall since January 2005, the Employment Index rose to 96.00 points in October, up by over half a point from a reading of 95.45 in September. This follows a slowdown in the pace of job vacancy decline between Q2 and Q3 2024, indicating resilience in the labour market.
However, looking ahead fiscal and monetary policies are expected to have opposing effects on employment recovery. Lower borrowing costs could stimulate activity and boost hiring intentions, but this may be offset by tax increases including employer National Insurance Contributions (NICs), which could reduce hiring intentions and place downward pressure on labour demand.
In contrast to the uptick in Employment, the Optimism Index dropped below the 100-point mark to 99.30 in October, which suggests that optimism is still in positive territory but below the long-term average, for the first time since April.
October’s decline in business confidence was driven by the Manufacturing Optimism sub-index, which fell 5.50 points from 104.80 in September to 99.30 amid concerns around lower gross revenue expectations in the sector. The Optimism Index may continue to fall in the near-term as businesses digest the effects of the Budget on their operations.
BDO’s Output Index also declined, falling to 96.15 in October, marking its second consecutive decrease since peaking in August at 97.88. Both services and manufacturing contributed to this decline, with Manufacturing Output particularly impacted by a fall in domestic orders as clients waited for the Budget. Weaker foreign demand and fewer international orders, amidst a slowdown in global activity also impacted this decline.
Kaley Crossthwaite, Partner at BDO said: “The modest uptick in the Employment Index this month is encouraging after its longest decline in nearly two decades, but we are still a long way from a full recovery. With the prospect of higher costs on the horizon, the challenge for UK businesses will be to balance rising expenses with efforts to stimulate hiring intentions and maintain output.
“The manufacturing and services sectors, in particular, face mounting challenges, with expected cost increases likely to influence business confidence and hiring intentions into 2025. Now more than ever, businesses need targeted support to navigate these financial pressures, drive growth, create job opportunities, and plug the skills gap.”
ENDS
Overview of the BDO indices
An overview of all four indices is provided in the table below, detailing figures for the last three months and the same month of the previous year, to allow for comparison. 100 = average value. Above 95 = positive.
BDO’s Business Trends is a ‘poll of polls’ and comprises multiple surveys covering 4,000 respondents. Further information on outputs is available on request, but please note the Labour Force Survey is not one of them.
Note to editors
Accountancy and business advisory firm BDO LLP provides integrated advice and solutions to help businesses navigate a changing world.
The organisations we work with are Britain’s economic engine –entrepreneurially-spirited, high-growth businesses that fuel the economy.
We understand the ambitions and entrepreneurial mindset of those we work with and have the global reach, integrity and expertise to help people and businesses succeed.
BDO LLP
BDO LLP operates in 17 offices across the UK, employing 7,500 people offering tax, audit and assurance, and a range of advisory services. BDO LLP is the UK member firm of the BDO international network.
BDO’s global network
The BDO global network provides business advisory services in 166 countries and territories, with more than 115,000 people working out of 1,776 offices worldwide. It has revenues of US$14bn.
Contacts
Tayla Garrety
tgarrety@headlandconsultancy.com
+44 (0)77 7669 2736
Ella Hatfield
ehatfield@headlandconsultancy.com
+44 (0)77 9868 7042
Press office
media@bdo.co.uk
- The Employment Index rebounded in October, marking its first month of recovery since June 2023 and ending its longest decline in nearly 20 years
- Outlook for businesses remains mixed following Budget amid falls in Business Output and Optimism
- Optimism falls below long-term trend for first time since April, driven by a decline in employment and lower gross revenue expectations in the manufacturing sector
Following 15 months of continuous decline, it’s longest fall since January 2005, the Employment Index rose to 96.00 points in October, up by over half a point from a reading of 95.45 in September. This follows a slowdown in the pace of job vacancy decline between Q2 and Q3 2024, indicating resilience in the labour market.
However, looking ahead fiscal and monetary policies are expected to have opposing effects on employment recovery. Lower borrowing costs could stimulate activity and boost hiring intentions, but this may be offset by tax increases including employer National Insurance Contributions (NICs), which could reduce hiring intentions and place downward pressure on labour demand.
In contrast to the uptick in Employment, the Optimism Index dropped below the 100-point mark to 99.30 in October, which suggests that optimism is still in positive territory but below the long-term average, for the first time since April.
October’s decline in business confidence was driven by the Manufacturing Optimism sub-index, which fell 5.50 points from 104.80 in September to 99.30 amid concerns around lower gross revenue expectations in the sector. The Optimism Index may continue to fall in the near-term as businesses digest the effects of the Budget on their operations.
BDO’s Output Index also declined, falling to 96.15 in October, marking its second consecutive decrease since peaking in August at 97.88. Both services and manufacturing contributed to this decline, with Manufacturing Output particularly impacted by a fall in domestic orders as clients waited for the Budget. Weaker foreign demand and fewer international orders, amidst a slowdown in global activity also impacted this decline.
Kaley Crossthwaite, Partner at BDO said: “The modest uptick in the Employment Index this month is encouraging after its longest decline in nearly two decades, but we are still a long way from a full recovery. With the prospect of higher costs on the horizon, the challenge for UK businesses will be to balance rising expenses with efforts to stimulate hiring intentions and maintain output.
“The manufacturing and services sectors, in particular, face mounting challenges, with expected cost increases likely to influence business confidence and hiring intentions into 2025. Now more than ever, businesses need targeted support to navigate these financial pressures, drive growth, create job opportunities, and plug the skills gap.”
ENDS
Overview of the BDO indices
An overview of all four indices is provided in the table below, detailing figures for the last three months and the same month of the previous year, to allow for comparison. 100 = average value. Above 95 = positive.
BDO’s Business Trends is a ‘poll of polls’ and comprises multiple surveys covering 4,000 respondents. Further information on outputs is available on request, but please note the Labour Force Survey is not one of them.
| October 2024 (Figures for this report) | September 2024 |
August 2024 |
July 2024 |
|
| BDO Optimism Index | 99.30 | 100.42 | 100.33 | 102.22 |
| BDO Output Index | 96.15 | 96.96 | 97.88 | 97.49 |
| BDO Inflation Index | 95.92 | 96.41 | 96.79 | 97.76 |
| BDO Employment Index | 96.00 | 95.45 | 95.89 | 96.33 |
Note to editors
Accountancy and business advisory firm BDO LLP provides integrated advice and solutions to help businesses navigate a changing world.
The organisations we work with are Britain’s economic engine –entrepreneurially-spirited, high-growth businesses that fuel the economy.
We understand the ambitions and entrepreneurial mindset of those we work with and have the global reach, integrity and expertise to help people and businesses succeed.
BDO LLP
BDO LLP operates in 17 offices across the UK, employing 7,500 people offering tax, audit and assurance, and a range of advisory services. BDO LLP is the UK member firm of the BDO international network.
BDO’s global network
The BDO global network provides business advisory services in 166 countries and territories, with more than 115,000 people working out of 1,776 offices worldwide. It has revenues of US$14bn.
Contacts
Tayla Garrety
tgarrety@headlandconsultancy.com
+44 (0)77 7669 2736
Ella Hatfield
ehatfield@headlandconsultancy.com
+44 (0)77 9868 7042
Press office
media@bdo.co.uk