Employment intentions weakened a little further and were broadly flat across the economy, reflecting caution due to slower output growth and Brexit uncertainty.
Employment intentions were modestly positive in business services, driven by job creation in IT, professional services and logistics.
But employment intentions continued to fall in consumer services, as retailers responded to weakening trading conditions and sought to mitigate the effect of the annual increase in the National Living Wage.
In manufacturing, the Agents’ employment intentions score fell to its lowest in more than two years. Job losses in sectors such as automotive were only partially offset by employment growth in aerospace and other high-tech industries.
Despite weakening employment intentions, recruitment difficulties increased a little (Chart 5). Contacts reported labour shortages across a broad range of sectors and skill levels. They continued to report particular shortages in IT, professional services, engineering and haulage. Many contacts said recruitment difficulties was one of their biggest challenges.
They also said that a lack of EU migrant workers had exacerbated conditions in some sectors, such as food-processing, logistics, hospitality, agriculture, horticulture and health and social care.
However, some reported that recruitment difficulties had eased in sectors undergoing consolidation or experiencing weaker demand, such as property-related services.
Pay settlements remained on average in the range 2½% to 3½%, and pay growth appeared to be flattening off after past rises. Nonetheless, contacts continued to give targeted pay awards to address skill shortages. And companies with a high proportion of low-paid staff concentrated pay increases on staff who were on or just above the National Living Wage.
Some contacts said that the increase in employer auto-enrolment pension contributions this year would add to total labour cost growth.
Chart 5: Recruitment difficulties and employment intentions
(a)Over the coming six months. (b)In the past three months, 'relative to normal'.