Eight in ten employers (79 per cent) believe that economic conditions are improving, according to the latest JobsOutlook survey by the Recruitment and Employment Confederation (REC).

Overall, 81 per cent of businesses plan to hire more permanent staff in the next three months. However, the data also indicates that hiring intentions are weakening within smaller businesses. In February 62 per cent of microbusinesses (1-10 employees) said they plan to hire in the next three months, down from 74 per cent in January. The regular survey of 600 employers also found that: 78 percent plan to take on more permanent staff in the medium term (3-12 months).

95 percent are operating with either no spare capacity or only ‘a little’ capacity to take on more work with their existing workforce. 17 percent expect a shortage of candidates for permanent technical/engineering roles over the next 12 months, while 15 per cent anticipate a shortage for permanent professional or managerial positions. Almost half (49 per cent) have awarded pay rises to staff in the last 12 months. REC chief executive Kevin Green says: “It’s encouraging to see positive data around business confidence and hiring intentions, but the survey also suggests weakening demand for staff from SMEs – this might be a reaction to the incoming National Living Wage or uncertainty caused by the impending EU referendum.

“Other headwinds such as the apprenticeship levy and a reduction in commodity prices make it more likely that hiring will moderate in the coming months. However, competition for talented candidates remains fierce especially where skills shortages are already entrenched, such as in technology, teaching and nursing. Engineering is a particular area of concern – the government announced new major infrastructure projects in last week’s Budget, but there are question marks over how increased demand for skilled workers will be met when supply is already a problem.”