Monday 02 August 2021 6:00 am | Updated: Saturday 31 July 2021 4:45 pm

UK jobs market recovery accelerates on better than expected consumer spending

The proportion of UK businesses expecting to ramp up hiring rose to 18 per cent, the sixth consecutive month of month and highest level since November 2018

The UK jobs market recovery is accelerating as a stronger than expected rebound in consumer spending is encouraging firms to take on staff, according to new figures released today.

Research published by Lloyds Bank shows the proportion of UK businesses expecting to ramp up hiring rose to 18 per cent, a sixth consecutive monthly increase and the highest level since November 2018.

The rapid rollout of Covid vaccines has reduced the severity of coronavirus infections, enabling policymakers to lift restrictions to curb the spread of the virus.

Firms that rely on face-to-face and social contact, predominantly in the services industry, to generate income have been able to partly resume normal operations, triggering a rush to hire staff to cope with a resurgence in demand.

Retail sales were 9.5 per cent higher in June of this year compared with their pre-pandemic February 2020 levels.

Meanwhile, the IMF predicts the UK economy to grow seven per cent this year, the joint highest rate of any G7 nation.

Lloyds’ figures also show workers could be set for a bumper pay day, with over a quarter of firms anticipating increasing wages by at least two per cent.

Hann-Ju Ho, senior economist at Lloyds Bank Commercial Banking, said: “A sixth consecutive monthly increase in employment expectations alongside an increase in pay growth predictions continues to highlight the resilience of UK businesses despite a slight dip in overall business confidence.”

“With COVID-19 restrictions having now been significantly eased in parts of the UK we can have further confidence in firms’ outlook for the UK economy.”

Virus headwinds dampen business confidence

An increase in Covid cases driven by the Delta variant has dampened business confidence due to concerns that restrictions could be reintroduced intensifying.

Lloyds’ research showed business confidence dropped three percentage points to 30 per cent over the last month.

Paul Gordon, managing director for SME and Mid Corporates at Lloyds Bank Commercial Banking, said: “There remains a fair degree of uncertainty on employment, skills, international trade and inflation.”