Employer confidence in the UK economy has dropped, as issues including access to labour and political uncertainty are creating jitters, the Recruitment and Employment Confederation (REC) said today.
Confidence has fallen into negative territory, falling from a net positive balance of six per cent last month to a negative reading of three in the latest report. Just under a third of employers expect the economy to worsen, while 28 per cent think it will improve.
Still, businesses are continuing to hire, and one in five said they were intending to increase permanent headcount in the next three months. While confidence in hiring and investment decisions remains positive, with a net balance of 10 per cent, it is at its lowest for the past year.
The latest REC survey of 601 employers found 40 per cent had no spare capacity and said they would need to recruit to meet additional demand.
REC chief executive Kevin Green said the drop in employer confidence "should raise a red flag".
The government must do more to create an environment where businesses have clarity.
That means clearly laying out what Brexit plans look like and how employers can keep recruiting the people they need from the EU.
The jobs market is in a good place but employers will only continue to hire and invest if they feel assured about the future.
There is also the added factor of a dip in consumer confidence, with GfK's recent index of consumer confidence falling to a negative reading of 12, equalling last year's post-referendum low. Green said falling optimism was "putting some businesses on edge", as a reduction in spending will hit firms.
It comes as a study by the Duke of Edinburgh's Award found that employers felt soft skills were too often overlooked, and should be renamed to reflect their importance. Some 82 per cent of over 500 UK senior managers thought they should be renamed "core skills" or "real life skills" to give the term more gravitas.
Of those surveyed, 98 per cent said they encourage young people to invest more time in enhancing their soft skills, while a third think such skills are more important than academic achievements.