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Economic Outlook for the employment market Release

Despite the sub-prime mortgage crisis and the resulting credit crunch, the economic outlook for the UK is not as bleak as some have painted.

At Friday's (2nd November) launch of the REC's Annual Turnover and Key Volumes Report 2006/07, Trevor Williams - chief economist for Lloyds TSB Corporate Markets - told attendees that growth of the UK is going to be over 3% this year.

However, he did say that there will be a slowdown in 2008 which will be driven by increased interest rates, and reduced consumer and investment spending. "The UK's GDP will grow by 2.3 % in 2008, whilst this is down on the 2007 figure it is consistent with economic predictions," Williams said.

The good news for the recruitment consultants assembled at the launch is that the impact of the credit effects on the real economy should be limited as global growth remains strong.

"Employment growth will slow to around 2.3% but there are plenty of opportunities for recruitment consultants. There is increasing pressure on the UK to compete against developing countries and we need skilled talent to allow us to do this. Additionally, the construction and services sectors have grown their employment levels by over 20% in the last 10 years and there are no signs of this slowing."

Adding to his comments, Paul Saunders, director of the Recruitment Finance Division at Lloyds TSB Commercial Finance, said: "The recruitment industry has been watching the financial markets with trepidation however the clear signal from today is that there is still room for growth. The combination of the CrossRail project with the 2012 Olympics and tube upgrades will create an enormous demand for both permanent and temporary workers and not just in the construction sector. The challenge is for recruiters to maintain their profit margins within an increasingly competitive environment."

The REC Annual Turnover and Key Volumes Report, 2006/07 which is sponsored by the Recruitment Finance Division of Lloyds TSB Commercial Finance, is the leading survey of recruitment industry. The report was unveiled today at a launch in London. The major findings of the report are:

  • A record total industry turnover of £26.673 billion compared to £24.837 billion in 2005/06
  • This represents a 7.3 per cent increase in overall turnover, the record annual growth rate since the survey was started in 2000/01
  • Overall turnover for temporary/contract staff rose by 7.4 per cent to £23.158 billion.
  • Total turnover for permanent staff rose by 7.3 per cent to £3.514 billion compared to £3.275 billion the previous year while at the same time, overall share of the market stayed steady at 13.2 per cent.
  • Permanent placements increased by 11.5 per cent from 706,080 in 2005/06 to 787,280.
  • Temporary placements went up from 1,265,060 to 1,377,740
  • The temporary/contract share of the total business was 86.8 per cent and permanent 13.2 per cent - no great change on the previous year
  • Staff employed in the recruitment industry rose to from 97,674 to 101, 286, an increase of 3.6 per cent

The Report was compiled by the REC's Industry Research Unit. Copies of the Report are available from the REC at www.rec.uk.com/research.

For further information about the Recruitment Finance Division of Lloyds TSB Commercial Finance, visit www.recruitmentfinance.co.uk.