Business News Round Up (11/07/2022)
UK economy headed for prolonged slump despite jobs market resilience
The UK economy is headed for a protracted slump and possibly a recession caused by soaring inflation hitting households and businesses, revealed a survey published yesterday. Output has dipped to its lowest level since February last year, when the country was in the teeth of the most onerous Covid-19 prevention measures, according to consultancy BDO. The firm’s index dropped nearly three points to around 98, below the 100 threshold that separates long-term growth and contraction. Weaker consumer spending prompted by Brits responding to rampant inflation eating into their finances weighed on services activity in June. Living costs are up 9.1 per cent over the last year, the fastest acceleration since the early 1980s. Wages have failed to keep pace, meaning consumers are unable to buy the same goods and services, eroding their living standards. The cost of living is projected to top 11 per cent this autumn, indicating the economy is in for prolonged period of weak growth or even a recession. BDO’s inflation index climbed to its highest level since records began. Supply chain disruption caused by China locking down trading hubs to deal with virus cases, the Russia-Ukraine war and higher input costs chilled manufacturing activity.
Hiring activity slows for second month – but RBS report shows starting pay is rising
Hiring activity in Scotland has slowed for a second month though starting pay rates are rising, a report from the Royal Bank of Scotland has found. The bank’s monthly report on jobs also found that rates of starting pay are increasing as employers seek to entice staff with the right skills. The report, based on data from around 100 Scottish recruitment and employment consultancies, found the increase in permanent staff appointments was the weakest since February 2021. The report also noted a sharp drop in permanent contract availability in June, which was linked to “ongoing skill shortages, a competitive labour market and Brexit”. Sebastian Burnside, chief economist at Royal Bank of Scotland, said: “For the second month running we have seen a slowdown in permanent staff hiring across Scotland in June. While the latest upturn was only slightly softer than that seen in May, it was nonetheless the weakest increase in permanent staff appointments since February 2021. However, temp billings grew at an accelerated rate during June, after the respective index hit a four-month low in May.” He continued: “June data also highlighted that demand for labour increased strongly, though rates of vacancy growth did ease compared to May. As a result, increases in starting pay remained sharp, with both salaries and wages rising at a faster rate than compared to the preceding month. Low staff availability and skills shortages meant that the labour market remained unfavourable for the employer during June, who are having to increasingly up pay offers in order to attract and secure staff with the right skills.”
https://www.insider.co.uk/news/hiring-activity-slows-second-month-27433101
North West’s economic recovery was close to stalling in June, according to new data
The North West’s economic recovery was close to stalling in June, according to new data from NatWest. The bank’s latest regional PMI data revealed that economic uncertainty and high inflation were both headwinds to demand, with the same factors also serving to dampen firms’ growth expectations. Cost pressures remained elevated, leading many firms to raise prices charged for goods and services, though the rate of output price inflation eased to a four-month low, it added. The headline North West Business Activity Index – a seasonally adjusted index that measures the month-on-month change in the combined output of the region’s manufacturing and service sectors – registered 51.2 in June, down from 53.0 in May. This was the lowest reading for five months and only just above the 50.0 threshold that separates growth from contraction. The upturn in the region’s services economy showed signs of losing momentum, while local manufacturing output declined. Inflows of new business at firms in the North West barely rose in June. The rate of growth was only marginal, and the weakest seen since the easing of lockdown restrictions in March 2021. The result mirrored that seen for the UK as a whole. Underlying data for the region indicated that a slowdown in services new business growth had coincided with a deepening downturn in manufacturing new orders.
https://www.business-live.co.uk/economic-development/north-wests-economic-recovery-close-24434436
Grant funding available for ambitious young business in the Highlands and Islands
Young businesses and social enterprises in the Highlands and Islands that are looking to increase productivity, innovation, and employment in the region, can apply for funding from the region’s development agency. The third round of the Highlands and Islands Enterprise (HIE) Young Business Capital Investment Grant (YBCIG) is now open to companies with up to 250 full-time equivalent employees. It follows on from the success of the first two rounds of the programme, introduced by HIE in 2020 to accelerate recovery from the pandemic. Together, the previous rounds have resulted in awards totalling £2.2m, generated around 160 FTE jobs and increased business turnover by more than £21m. Businesses interested in applying must be less than five years old, operate within a defined range of growth sectors (see notes) and have a clear ambition to work out with local markets. The scheme can provide grant funding of up to 50% of eligible costs for capital equipment and works. The maximum grant available is £100,000. YBCIG aims to accelerate business growth, increase their contribution to the local economy and help to create new employment opportunities. The fund is open to those who can demonstrate creating and retaining well paid or green jobs as well as increasing efficiency and outputs or focusing on sustainability and growth.