UK economy continues Brexit bounce back according to latest jobs and housing figures

Jobs and housing surveys were gloomy last month but have rebounded strongly in August

Ben Chapman
Thursday 08 September 2016 18:11
Firms are hiring more permanent and temporary staff after hiring had dropped off
Firms are hiring more permanent and temporary staff after hiring had dropped off

Britain's economy continued its bounce from the initial shock of the Brexit vote with two positive jobs and housing surveys, both of which had pointed to a gloomy outlook only last month.

The Recruitment and Employment Confederation - which reported hiring was in “dramatic freefall” in July, yesterday recorded an increase in firms hiring permanent staff - the first time the measure has been positive in three months. Companies are also were also spending more on temporary workers, the report said.

The Royal Institution of Chartered Surveyors predicted a “sharp downturn” in house sales when in its last monthly report, after buyer inquiries dropped off, but yesterday said its monthly house price index jumped to +12 in August from July's three-year low of +5.

“There are clear signs that the housing market is settling down after the initial surprise of the outcome to the EU referendum,” RICS chief economist Simon Rubinsohn said, in a far more upbeat announcement.

The recovery in the RICS and REC surveys follows a pattern set by surveys of the services and manufacturing sectors which plunged in July, when Britain was plunged into political chaos by the Brexit vote, before rising sharply in August.

Company results yesterday chimed with the renewed positivity of industry data as property website Zoopla said annual earnings would hit the top end of forecasts, while housebuilders Barratt and Redrow also reported stronger than expected results.

Several analysts have readjusted their forecasts for the UK economy in recent days after a string of relatively positive data. Morgan Stanley said on Wednesday it now predicted zero growth, having foreseen a 0.4 per cent contraction a month ago. Credit Suisse and Goldman Sachs also revised their figures upwards this week.

Mark Carney, Bank of England governor, said on Wednesday that economic growth seemed to be slowing to about half its pre-referendum pace, less severe hit than the Bank had previously predicted.

REC chief executive Kevin Green said it was too soon to draw long-term conclusions about the health of the job market.

“The fact that vacancy growth has softened is concerning, suggesting that hiring could be volatile over the coming months,” he said.

Green also called on the government to allow easy movement of EU workers to continue to come to Britain easily to work once Brexit becomes a reality.

“Developing an immigration policy which will allow employers to access enough candidates for the jobs available is vital,” Green said.

RICS said that for the first time since April its members expected house prices to rise over the coming three months, and forecast a 1.1 percent increase in prices over the next year.

Samuel Tombs of Pantheon Macroeconomics was less positive about the outlook. “Looking ahead, a renewed squeeze on households' real incomes, largely due to a rebound in inflation, likely will put renewed downward pressure on demand. As such, we doubt that house prices will return to a smooth upward trajectory,” he said.

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