Companies in the East of England hired additional employees in May at the second-strongest rate since records began for the Lloyds Bank East of England business activity index.
New jobs were created in both the manufacturing and service sectors as private sector growth in the region gathered pace and increases in new business led to a sharp expansion of output, according to the survey of purchasing managers.
Separately, a Manpower survey showed employers hiring intentions in the East of England remain highly optimistic although they continue to face a shortage of candidates. It shows an outlook of +7 per cent in the East, more optimistic than the national average. “The East continues to be very confident when it comes to hiring, with an outlook above the national average going into the third quarter," said Krissie Davies, operations director at Manpower UK
The Lloyds Bank East of England business activity index saw a four-month high of 57.8 in May, above the UK average and with growth at both manufacturers and services firms.
Despite rising staff numbers, backlogs of work increased in May, following a decline seen in April. Having gained strength since April, the rate of cost inflation was the fastest since last November. Companies reported higher salaries paid to staff and rising raw material costs. Whereas service providers recorded an increase in costs, manufacturers signalled a reduction.
Part of the extra cost burden was passed on to clients as firms raised their selling prices in May. Output charges also increased at a quicker rate, one that was the most marked in seven months. Services firms registered higher tariffs, while goods producers noted a reduction.
Steve Elsom, area director for SME Banking in the East of England, Lloyds Bank Commercial Banking, said: “There was more positive news for businesses in the East of England last month, as output growth remained well above the long-run average, boosted by strong increases in new work. In May firms saw new orders, output and employment rise at quicker rates than those seen at the national level. On the negative side, inflation rates strengthened on the back of rising raw material and salary costs.”
Highly optimistic
Employers hiring intentions in the East of England remain highly optimistic although they continue to face a shortage of candidates according to a survey by Manpower. It shows an outlook of +7% - down 1 per cent on April - in the East but more optimistic than the national average. “The East continues to be very confident when it comes to hiring, with an Outlook above the national average going into the third quarter.
However, while employers are continuing to look at creating new roles, they are finding it increasingly hard to find candidates in the region to fill them. This is particularly so in Cambridge, where we’re seeing skills shortages across the board, while in Peterborough, candidates experienced in sales, call centre and IT roles are in the shortest supply and the highest demand,” said Krissie Davies, operations director at Manpower UK.
“Employers may be challenged to find the people they need, but for candidates the picture is more positive. This market enables those looking for roles to negotiate on salary and other benefits, so we may start to see some uplift in pay in the region. Where there are talent shortages, those looking to move into a new career may find the leap easier if they can demonstrate to their prospective employer that they have transferable skills that will help them get up the curve quickly.”
Going into the third quarter of 2015, the national seasonally adjusted net employment outlook remains at +6% for the fourth successive quarter. While our research shows that demand for staff remains strong, and employment stands at a 40-year record high, a shortage of candidates means many employers are struggling to fill the vacancies.
In the rest of the country, the jobs market looks positive going into the third quarter. The South West, London and the East Midlands are particularly positive, at +9%. Wales (+8%) and the North West (+7%) also beat the national average, while the West Midlands (+5%), the South East (+4%), Yorkshire and Humberside (+3%) and Northern Ireland (+2%) also record optimistic Outlooks.