Services firms hire new workers at fastest pace in 17 years
New survey showed firms are creating jobs at a level seen only once since 1997 and bigger salaries
A hiring spree among the UK’s powerhouse services firms kept up the rapid recovery pace in May as employers shelled out to secure new staff, a closely-watched survey revealed yesterday.
The Chartered Institute of Purchasing & Supply’s latest snapshot of a sector spanning restaurants to accountants showed hiring matched the fastest pace seen in the survey’s 17-year history. The hunt for workers also pushed running costs up to the fastest pace for four months as wages rose.
Services account for around three-quarters of the economy. The upbeat survey —along with similar healthy signs from manufacturers and builders — puts the UK on course for growth of at least 0.8 per cent in the current quarter. That would be as strong as the first three months of the year and finally take the economy past its pre-recession peak in 2008.
“Firms in the services sector are creating jobs at a level seen only once since 1997 and offering bigger salaries to boot,” said Cips chief executive David Noble.
The survey’s measure of overall activity, where a score over 50 signals growth, edged lower to 58.6 from April’s 58.7 but remains at historically high levels.
Strong growth and rising wages will inevitably provoke debate among the Bank of England’s rate setters, who will conclude their two day meeting today. The Monetary Policy Committee has left interest rates on hold at just 0.5 per cent since March 2009 although inflation is below the 2 per cent target at 1.8 per cent.
Markit’s chief economist Chris Williamson suggested further strong economic data would increase the pressure on the Bank to lift rates. “With every strong PMI reading, the more lively the discussion will become among the Monetary Policy Committee that a pre-emptive early hike in interest rates is warranted” he said.
But Investec chief economist Philip Shaw predicted that the MPC will not move on rates until the middle of next year. “We are in the sweet spot of the cycle where you are getting good news on the recovery but we aren’t getting an inflation threat” he said. “We certainly haven’t seen pressure on the US Federal Reserve to raise interest rates just yet and they have a more-established recovery than the UK.”
The Markit survey reported services firms increasing hiring to deal with higher sales and work outstanding. Backlogs of work rose for a fourteenth successive month in May. Firms also took on staff to implement business expansion plans. They remained confident that activity will continue. They are expecting to take advantage of the improved business climate to bolster market share and expand their businesses.
However, some economists pointed out that while strong hiring by service firms was beneficial in the immediate term, it also pointed to weak productivity growth. “While this is good news for the near-term outlook for consumer spending, productivity growth will need to pick up if the economic recovery is to maintain its present momentum over the medium term” said Samuel Tombs of Capital Economics.
Sales of the tablet are set to fall again, say analysts
Met Police confirm there was a 'minor disturbance' and no-one was arrested
George Lucas criticises the major Hollywood film studios
Does Chris Grayling realise what a vague concept he is dealing with?
Trend which requires crisps, a fork and a strong stomach is sweeping Mexico's streets
Concerns raised phenomenon is threatening resort's image as a family destination
I Am Bread could actually be a challenging and nuanced title
Peter Biaksangzuala died from his injuries in hospital on Sunday
The X Factor's judges colourful outfit was mocked by Simon Cowell
- 1 Ebola outbreak: What is bushmeat – and is it to blame for the disease that has killed thousands?
- 2 Star Wars memorabilia called a 'bit of plastic' on Antiques Roadshow by Fiona Bruce valued at £50,000
- 3 Drink alcohol and eat meat to improve male fertility - but cut down on coffee, studies suggest
- 4 Russell Brand might seem like a sexy revolutionary worth getting behind, but he will only fail his fans
- 5 Kentucky gang rape: 15-year-old boy left in critical condition after sexual attack by group at party
Sophia Loren: How I rejected Cary Grant and 'pulverised' Marlon Brando with my eyes
Ebola outbreak: What is bushmeat – and is it to blame for the disease that has killed thousands?
'Russian submarine spotted' by Swedish military off coast of Stockholm
Kentucky gang rape: 15-year-old boy left in critical condition after sexual attack by group at party
Oscar Pistorius sentence: Athlete's wealth and notoriety provoke an overdue debate on South African prisons
Cameron is warned 'no possibility' of UK reducing immigration and that bid to bring in quota on migrant workers would be illegal
Sorry Judy Finnigan – Ched Evans is no less sickening than an alleyway rapist
Residents should throw a street party and mix with immigrant neighbours, councils told
Workers 'could be forced to pay £5 a week' to get benefits
Russell Brand threatened with arrest after filming outside Fox News headquarters
Amal Alamuddin calls for the return of the Elgin Marbles from Britain: 'Injustice has persisted for too long'
iJobs Money & Business
£18 - 23k + Benefits: Guru Careers: We are seeking a Customer Service Executiv...
£60 - 65k + Benefits: Guru Careers: We are seeking a ASP.NET Web Developer / ....
£60,000 - £80,000: Saxton Leigh: Our client is an leading Asset Manager based...
£27000 - £32000 Per Annum: Clearwater People Solutions Ltd: Our large charity ...