A new survey suggested that the confidence of UK employers in making investment and hiring decisions slipped to its lowest level in July since the Brexit vote last year.
The study conducted by The Recruitment and Employment Confederation’s (REC) JobsOutlook reported that a net balance of +10 was confident about increasing hiring and investment over the next three months, its lowest score registered since June 2016.
Also, the poll inferred that employers are becoming more concerned about the state of the UK economy, with confidence in the general economy declining to -3 from +6 in June.
Only 28% of the 601 firms surveyed expect the economy to improve while 31% foresee it to worsen.
“The jobs market continues to do well despite growing uncertainty,” Kevin Green, REC chief executive, said. “However, this drop in employer confidence should raise a red flag.”
“Businesses are continuing to hire to meet demand, but issues like access to labour, Brexit negotiations and political uncertainty are creating nervousness.”
40% of employers stated that they had no spare capacity and would require recruiting to meet additional demand, although many expressed concerns about a lack of suitable applicants for vacancies, especially in construction.
Since records began in 1975, the unemployment rate in the UK is at its lowest level, requiring more time to consume for businesses to hire staff as there are fewer qualified people available for those positions.
The decline in employer confidence in the UK has coincided with the decline in consumer confidence, with GfK’s consumer confidence index plunging to its weakest level since the Brexit vote.
“Employers in the construction sector are especially concerned as they rely heavily on EU workers to meet the growing demand for housing and to support the government’s infrastructure plans,” added Green.
“The added factor of dropping consumer confidence is putting some businesses on edge. If people reduce their spending, businesses will be impacted.”
Green called on the government to present greater clarity to businesses over Brexit negotiations and whether firms can proceed to hire nationals from the European Union.