UK employers step up hiring despite drop in consumer confidence

UK employers unleashed a hiring spree at the start of 2023 even as consumer confidence about the economy stalled, two separate surveys showed.

There were more than 184,000 new job advertisements in the first week of January, up by a quarter on the same period a year ago, according to the Recruitment & Employment Confederation (REC). The market research firm GfK said its measure of consumer sentiment fell 3 points to minus 45 in January, the first decline in four months.

The figures point to strength in the economy despite a cost-of-living crisis that’s likely to push the UK into a long, shallow recession this year. Tightness in the labour market is fanning upward pressure on inflation, making it more likely that the Bank of England raises interest rates again next month.

“January is often a time when employees look for a new role, so it is reassuring to see plenty of options out there,” said Neil Carberry, chief executive officer of REC. “While businesses are being a notch more cautious in the face of economic uncertainty, the scale of the shortages we face mean many firms still need to hire.”

Businesses have been battling severe worker shortages, with high demand for staff fuelling the strongest wage growth on record outside of the pandemic.

Total job adverts were up to 1.53 million, a 1.5 per cent increase on the previous week. The vacancies boost was driven by higher demand for police officers, taxi drivers, gardeners and cleaners among others.

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GfK said its survey, now only 4 points from the record low set in September, showed households becoming more downbeat over the economic backdrop and buying big-ticket items.

“With inflation continuing to swallow up pay rises, and the prospect of some shocking energy bills landing soon, the forecast for consumer confidence this year is not looking good,” said Joe Staton, client strategy director at GfK. “One thing we can be sure of is that 2023 promises to be a bumpy ride.” BLOOMBERG