Report shows recovery will not boost jobs

Report shows recovery will not boost jobs No silver bullet for employment market Unemployment in the UK is likely to hit 2.75 million in November 2010, compared to latest figures of 2.47 million unemployed, according to the latest Business Trends report by accountants and business advisers BDO LLP. After falling for several months, this month’s Business Trends UK Employment Index has levelled off at 93.4 in September, compared to 93.6 in October. This suggests firms are currently holding on to staff in readiness for recovery and is set against a backdrop of rising optimism levels - the UK Optimism Index rose from 95.8 in September to 96.0 in October. However, the flip side of this is that with private sector firms retaining existing staff, a boom in recruitment is doubtful when the upturn takes hold. In addition, public sector employment is set to start falling as the Government is forced to balance its books, leading to further increases in unemployment in late 2010 and beyond. BDO’s Output Index suggests that a strong upturn may still be some way off. The Index, a measure of order-book strength, has remained stationary at 95.8, showing that businesses are not growing their order books and that as a result rising optimism in the short term is misplaced. Malcolm Thixton, Head of Business Assurance at the BDO Southampton office commented: “Britain’s bosses will have difficult decisions to make when the upturn arrives, including continuing to take a close look at their workforces. Many companies have done their utmost to hold onto staff, so they are unlikely to be advertising for new recruits even when demand increases. Unfortunately there will be no silver bullet for unemployment when recovery does arrive. “Also it’s clear that a renewed sense of optimism isn’t necessarily being reflected where it counts – order books. This suggests that it could be a while before a strong upturn arrives.” - Ends – Note to editors The BDO Business Trends Report Indices are calculated by taking a weighted average of the results of all the UK’s main business surveys carried out during the last month. Methodological notes: The BDO Monthly Business Trends Indices are prepared on behalf of BDO LLP by the centre for economics and business research (cebr). Taken together the surveys cover over 11,000 different respondents from companies employing approximately five million employees. The respondents cover a range of different industries and a range of different business functions. Together they make up the most representative measure of business trends available. The surveys are weighted together by a three-stage process. First, the results of each individual survey are correlated against the relevant economic cycles for manufacturing and services. This determines the extent of the correlations between each set of survey results and the relevant timing relationships. Then the surveys are weighted together based on their scaling, on the extent of these correlations and the timing of their relationships with the relevant reference cycles. Finally, the weighted total is scaled into an index with 100 as the mean, the average of the past two cyclical peaks as 110 and the average of the past two cyclical troughs as 90. The results can not only be used as indicators of turning points in the economy but also, because of their method of construction, be seen as leading indicators of the rates of inflation and growth. BDO LLP operates across the UK with some 3,000 partners and staff. BDO LLP is a UK limited liability partnership and a UK Member Firm of BDO International. BDO - Belfast, a separate partnership, operates under a licence agreement. BDO International is a world-wide network of public accounting firms, called BDO Member Firms. Each BDO Member Firm is an independent legal entity world-wide and no BDO Member Firm is responsible for the acts and omissions of another member. The network is coordinated by BDO Global Coordination B.V., incorporated in the Netherlands with its statutory seat in Eindhoven (trade register registration number 33205251) and with an office at Boulevard de la Woluwe 60, 1200 Brussels, Belgium, where the International Executive Office is located. The combined fee income of all the BDO Member Firms was $5.14 billion in 2008. The global network has 1,095 offices in 110 countries and more than 44,000 partners and staff provide business advisory services throughout the world. BDO LLP and BDO - Belfast are both separately authorised and regulated by the Financial Services Authority to conduct investment business. BDO is the brand name for the BDO International network and for each of the BDO Member Firms. Contacts Laura Gainsford on behalf of BDO, or Laura Hegarty if out of office hours Debbie Osborne LCM Tel: 020 7260 2700 or if out of office hours: 07919 205301 Email: laura.gainsford@bluerubicon.com Tel : 0845 345 6969 Email : debbie@lcm.co.uk