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New research from BDO suggests hiring intentions from UK business owners are at “sky-high” levels with figures reportedly higher than pre-recession figures from the mid-2000s.

The Employment Index from the BDO stands at 113.0 – significantly higher than last year’s figures of 104.3 at the same time of the year – indicating that businesses will continue to create new jobs in the months ahead.

Nevertheless, the report still highlights areas for improvement for the UK economy, with productivity poor despite strong economic expansion.

UK workers’ output per hour has remained static amid the last two years of economy recovery, which is an unprecedented period of flat productivity since World War II, according to BDO.

But despite such a negative trend, BDO’s Output and Optimism Indices – which forecast economic growth in the next two quarters – remain well above the 100 mark, which indicates growth beyond the long-term trend.

Small businesses have also been given an additional boost as input costs continue to fall, with BDO’s Inflation Index recorded at just 93.8, down from 94.7 last month, signifying deflation.

The indices are calculated by including a weighted average of results from the UK’s leading business surveys such as the quarterly CBI Industrial Trends Survey; the Bank of England Agents’ summary of UK business conditions; and the Markit/CIPS Manufacturing and Services PMI data.

Peter Hemington, partner, BDO, said: “While it is encouraging to see strong business confidence, the UK’s continuing poor labour productivity performance is a very significant concern.

“Although employment growth in recent years has been strong, much of this has been in part-time jobs.

“Productivity ultimately determines our prosperity so it is a crucial area that must be addressed.

“Policymakers of all persuasion must take on this productivity puzzle.”

Date published 5 May 2015 | Last updated 30 Apr 2015

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