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Hiring intentions strong but a lack of UK productivity growth causes concerns

Static productivity of UK workers remains a concern for the economy
Static productivity of UK workers remains a concern for the economy

The hiring intentions of UK firms are at ‘sky-high’ levels but a lack of productivity growth causes concerns, a new report has warned.

The latest Business Trends Report by the BDO shows an Employment Index measuring of 113.0 – well above its long-term trend. The report suggests that UK firms will continue to boost job creation in the coming months.

However there are still big areas of concern for the economy. The UK continues its puzzling failure to increase productivity, despite continuing strong economic expansion.

“Productivity ultimately determines our prosperity so it is a crucial area that must be addressed.  Policymakers of all persuasion must take on this productivity puzzle,” said BDO partner Peter Hemington.

UK unemployment fell by 102,000 to 1.86m in the three months to January, with the unemployment rate at 5.7%, according to figures by the Office for National Statistics (ONS).

The report also points out the static level of British workers’ output per hour during the last two years of the recovery.

However, despite this negative trend, the BDO’s Output and Optimism Index predict that business confidence remained well above the 100 mark.

“While it is encouraging to see strong business confidence, the UK’s continuing poor labour productivity performance is a very significant concern,” said Hemington.

SASKIA VALLENDAR - Deputy-News-Editor

Recent graduate with a degree in journalism and cultural studies. Her interest lies in business and financial journalism.                                  Twitter: @saskiavallender

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