The Chancellor, Rachel Reeves, has welcomed the new figures that show an unexpected growth rate for the UK’s economy in February. However, new data on recruitment for March shows a continuing decline in activity.
The UK’s Gross Domestic Product grew by 0.5% in February after a zero-percentage growth in January. This was revised upward from a 0.1% decline.
Reeves admitted that the growth numbers were prior to President Trump’s various tariff announceds: “These figures are encouraging, but we aren’t complacent.” We have seen the world change over the past few weeks.
This government will be pragmatic and cool-headed in its pursuit of the best possible deal with the US for our national interests.
Construction output increased by 0.4% and production output by 1.5%. The services output increased by 0.3%.
The GDP was expected to rise only by 0.1% per month.
Anna Leach said that it was good to see a “pretty wide-based strength” with retail sales and travel service accelerating, pointing out signs of consumer spending lifting. She also noted a pick-up in manufacturing and car sales.
Overall, car sales are still down 10% on last year due to a variety of factors, both domestic and global.
She said that while the UK’s approach to US tariffs is correct, “unfortunately global policy uncertainty appears likely to remain high in the near future and this will slow down decision-making and increase financing costs for businesses, beyond the direct effect of tariffs”.
It was therefore even more crucial for the government, to promote stronger growth through as many channels and avenues as possible. This included stronger industrial and trading strategies, deregulation and a pragmatic approach towards the net-zero transformation.
Nicholas Hyett of Wealth Club also said that the ONS data had been somewhat outdated by President Trump’s actions. He added: “Nevertheless, it is a very positive picture, with output growing in all three of the major sectors. Manufacturing grew quickly, and consumer services showed signs of progress. The overall growth of 0.5% is impressive. It’s much faster than the market and we expected. In the absence of disruption, it would have been an indication that the UK economy has evolved nicely.”
He added, “Donald Trump upended the global trading system.” This could have led to the UK’s economic growth going extinct, making today’s numbers a window into a forgotten world.
The hiring activity has declined
Despite better news in February on the growth of the UK’s labour market, the March Report on Jobs by KPMG and The Recruitment & Employment Confederation based on data collected from employers and recruitment consultancies, indicated that the UK labour markets remained weak.
The hiring activity has declined once again. Economic uncertainty, tighter budgets and a lower demand from clients were cited as the main factors. The number of permanent staff placements declined for the 31st month in a row, and the rate of decrease was unchanged since February. Temporary billings fell as well, but at a slower rate than in the previous three months.
The labour supply has increased sharply. This is the largest increase since December 2020. The availability of both permanent and temporary employees improved largely because of redundancies, and there were fewer job openings.
The demand for staff was subdued. March was the 17th consecutive month of contraction, despite the slowing pace of the vacancy decline. The seasonally-adjusted vacancy index rose from 44.2 to its highest level in 5 months. The number of permanent vacancies has continued to decline for 19 consecutive months, and temporary job openings have also decreased, but at a slower pace.
Public sector vacancies fell more than private sector ones. The most dramatic fall in vacancies was seen for permanent positions in the public sector, while the smallest was observed for temporary positions within private sector.
The average starting salary remained below the long-term median, despite a slight increase from February’s low of four years. Temporary wage growth was also modest, but slightly improved. While some companies increased wages to attract qualified candidates, recruiters reported that limited budgets and weak demand as well as better staff availability, curbed wage increases.
Jon Holt said about the March data: “Recent events in the world have put pressures on the growth prospects of the UK. It is unlikely that the data will improve in the near future.” Redoubling employee engagement programs and maintaining morale among existing employees will help businesses be ready to seize any green shoots that may appear.
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