Page last updated at 13:23 GMT, Wednesday, 9 September 2009 14:23 UK

UK employment market 'recovering'

People queue outside job centre
Official figures show that unemployment is still rising

The UK jobs market is starting to show signs of recovery, according to a survey of recruitment agencies.

The monthly research from KPMG and the Recruitment and Employment Confederation found "marginal increases" in appointments in August.

"This is first time we have seen really positive news for the UK jobs market in 17 months," the report said.

However, it added that it was too early to say whether the encouraging figures signalled an end to the recession.

A number of economic surveys this week have been more positive about the state of the UK economy, but the BBC's chief economic correspondent Hugh Pym describes it as "bumping along at the bottom" at best.

Business Secretary Lord Mandelson said he believed the economy was coming out of recession but warned there may still be problems ahead.

"I think the signs are that it is [coming out of recession], but there is always a risk of a second recessionary dip," he told the BBC.

Hugh Pym
Hugh Pym, BBC chief economics correspondent

Bumping along the bottom is the best way to describe the path of the British economy right now.

The dramatic drop in output we saw in the first quarter of the year was not repeated in the second - there was a smaller fall in activity in those three months ending in June. The debate now is what will happen in the third quarter, which ends this month.

Several commentators have predicted that some sort of growth will be seen in this period but the leading think tank the OECD believes another fall in output is possible.

Even if there is an upturn in activity it wont be much. And most consumers, workers and those who have lost their jobs won't realise anything has changed.

The recession may technically end but that does not mean economic conditions will automatically return to normal.

"Given that risk, we have to be sure that the measures and interventions that we are undertaking at the moment are continued and not withdrawn prematurely."


The Markit Economics report found that the decline in the number of vacancies is easing, and that the decline in pay is the slowest in 10 months.

"It seems that employers are becoming more confident in their hiring decisions," said Kevin Green, chief executive of the Recruitment & Employment Confederation, the survey's other co-sponsor.

The latest official jobless figures showed that the number of people out of work in the UK had risen to its highest level since 1995.

Unemployment increased by 220,000 to 2,435,000 in the three months to June, taking the jobless rate to 7.8%.

Consumer confidence

Separately on Tuesday, Nationwide's Consumer Confidence index showed that UK consumers are the most optimistic about the future they have been in over a year.

The index rose to 63 in August from a revised 61 the previous month, the highest since May 2008.

The survey suggests consumers have a greater willingness to spend as economic data suggests the UK recession may be approaching its end.

"[This] is no surprise, as a number of key economic indicators continue to show that we may have reached the bottom of the current recessionary cycle," Nationwide's chief economist Martin Gahbauer said.

On Tuesday, respected research institute the National Institute of Economic and Social Research suggested the UK economy grew 0.2% in the three months to August.

And UK manufacturing output rose at its fastest rate in 18 months in July, helped by a sharp pick-up in car production, official figures showed.

Recovery risks

But the Nationwide survey suggested consumers are still downbeat about their present employment and economic circumstances, with more than 70% describing it as "bad".

On Tuesday, the British Retail Consortium said retail sales fell in August on a like-for-like basis after two months of increases, casting doubt on a prolonged recovery in consumer spending. However, including the impact of new stores, overall sales were up 2.2%.

Last week, revised official figures showed that the rate of contraction of the UK economy in the three months from April to June was 0.7% from 0.8% compared with the previous quarter - less than previously estimated.

But the annual drop of 5.5% remains the biggest since records began in 1955.

The UK has been in recession since March 2008.

Uk unemployment

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