Tag: analysis

Royal Bank of Scotland: October report on jobs

Renewed downturn in permanent placements during October

  • Permanent placements fall amid growing economic uncertainty
  • Temp billings decline for first time in 26 months
  • Pay pressures soften, but remain strong overall

Hiring activity across Scotland fell into decline during October, with both permanent staff appointments and temporary billings contracting, according to the latest Royal Bank of Scotland Report on Jobs survey.

Permanent placements have now fallen in two of the past three months, while the downturn in temp billings was the first seen since August 2020. Moreover, the rates of contraction were strong overall amid reports of growing economic uncertainty, softening demand conditions and the deepening cost of living crisis.

October data also revealed further increases in starting salaries and temp wages. However, rates of inflation continued to ease, signalling a mild waning of pressure on pay.

Permanent staff placements fall solidly

October data highlighted a fall in permanent staff placements across Scotland. After a month of growth in September, the respective seasonally adjusted index reverted below the neutral 50.0 threshold to signal the second reduction in three months.

The rate of contraction was the fastest seen in nearly two years and solid, with recruiters often linking the fall to growing economic uncertainty and the cost of living crisis.

At the UK level, a fall in permanent staff hires was also noted, with the rate of decline similar to that seen in Scotland.

Scottish recruitment consultancies signalled a reduction in temp billings during October, thereby ending a 25-month run of expansion. The rate of contraction was the quickest seen since July 2020 during the initial wave of the pandemic and strong overall. According to panellists, the latest fall was driven by reduced activity at clients. 

Across the UK as a whole, temp billings were broadly stagnant after rising in each of the prior 26 months.

Downturn in permanent staff supply fastest in three months

Recruiters across Scotland noted a twenty-first successive monthly fall in permanent candidate availability during October. The pace of decline quickened on the month and was marked overall. Panellists generally linked the latest downturn to skill shortages and increased hesitancy to seek out new roles due to rising economic uncertainty.

The pace of reduction across Scotland was more rapid than that recorded for the UK as a whole.

The supply of temp labour across Scotland fell again during October. Despite being severe overall, the rate of decline was the second-slowest in seven months (after September). Recruiters highlighted a lack of European workers and ongoing skill shortages as factors constraining supply.

As has been the case for the last seven months, the rate of contraction in temp staff availability in Scotland was sharper than that seen at the UK level.

Starting salary inflation softens further in October

Latest survey data indicated that average starting salaries for permanent staff in Scotland increased at the slowest pace since June 2021 during October. That said, the pace of wage inflation remained elevated in comparison to the historical average. According to anecdotal evidence, skill and candidate shortages continued to drive up rates of pay.

Data for the UK as a whole also signalled a softer rise in starting salaries during October. Moreover, the pace of inflation was softer than that seen for Scotland for the first time in four months.

As has been the case for the past 23 months, temp wages rose across Scotland during October. While the respective seasonally adjusted index hit an 18-month low, it signalled a sharp rise overall. Greater competition for scarce candidates was cited as a key driver of the latest increase in temp pay.

At the national level, wages also increased at a much slower rate during October. However, the rate of inflation was quicker than that registered in Scotland.

Demand for permanent staff expands at slowest pace in 20 months

Demand for permanent staff grew sharply during October, thereby extending the current period of expansion to 21 months. However, the respective seasonally adjusted index fell for the sixth month running, with the latest reading edging down to a 20-month low.

Across the monitored job categories, IT & Computing registered the steepest rate of expansion, followed by Nursing/Medical/Care.

Recruiters across Scotland noted a twenty-fifth successive monthly rise in temp staff demand during October. While the rate of growth was the weakest since February 2021, it was quicker than that seen across the UK as a whole.

At the sector level, IT & Computing saw the quickest growth in short-term vacancies, followed by Accounts & Financial.

Sebastian Burnside, Chief Economist at Royal Bank of Scotland, commented: “Labour market conditions across Scotland deteriorated in October, as for the first time since August 2020, both permanent placements and temporary billings contracted.

“At the same time, rates of vacancy growth for both permanent and short-term staff continued to ease. Candidate and skill shortages meanwhile stretched the supply of labour thin, with recruiters also noting that increased economic uncertainty had impacted candidate numbers. Though it does seem that market imbalances are becoming less pronounced, the effect on pay remains strong.

“The data therefore suggest that growing uncertainty about the economy and the cost of living crisis are already affecting the labour market, and could weigh further on hiring decisions for the remainder of the final quarter of 2022.”

Spring Statement: Lack of support will see 1.3 million people pushed into absolute poverty next year

In his Spring Statement, the Chancellor promised to support families through the cost of living crisis today, and to cut their taxes in the future. But his failure to deliver on both of these means that absolute poverty is expected to rise by 1.3 million people next year, while only one-in-eight workers will see actually see their tax bills fall by the end of the parliament, according to the Resolution Foundation’s overnight analysis of Spring Statement 2022 today.

Inflation Nation shows that faced with an unprecedented squeeze on family’s household finances and a significant boost to the public finances, the Chancellor opted for a big but poorly targeted policy package focused on partially offsetting some of the big tax rises he’d previously announced, rather than on supporting those families hit hardest by the cost of living crisis.

Key findings from the overnight analysis include:

  • Families face £1,100 income losses. The scale of the cost of living squeeze is such that typical working-age household incomes are to set to fall by 4 per cent in real-terms next year (2022-23), a loss of £1,100, while the largest falls will be among the poorest quarter of households where incomes are set to fall by 6 per cent.
  • Absolute poverty rises by 1.3 million. The scale and distribution of the cost of living squeeze, coupled with the lack of support for low-income families, means that a further 1.3 million people are set to fall into absolute poverty next year, including 500,000 children – the first time Britain has seen such a rise outside of recessions.
  • Tax rises for seven-in-eight workers. Considering all income tax changes to thresholds and rates announced by Rishi Sunak, only those earning between £49,100 and £50,300 will actually pay less income tax in 2024-25, and only those earning between £11,000 and £13,500 will pay less tax and National Insurance (NI). Of the 31 million people in work, around 27 million (seven-in-eight workers) will pay more in income tax and NI in 2024-25.
  • A £11,500 wage loss. With real wages in the midst of a third major fall in a little over a decade, average weekly earnings are on course to rise by just £18 a week between 2008 and 2027, compared to £240 a week had they continued on their pre-financial crisis path. This lost growth is equivalent to a £11,500 annual wage loss for the average worker.
  • A parliament of pain. Typical household incomes are forecast to fall by 2 per cent across the parliament as a whole (2019-20 to 2024-25), making this parliament the worst on record for living standards, beating the 1 per cent income fall over the course of the 2005-05 to 2010-11 parliament.
  • Rapid fiscal consolidation. The decision to bank much of the borrowing windfall set out by the OBR sees borrowing set to fall rapidly from 14.8 per cent of GDP in 2020-21 to 1.3 per cent of GDP in 2024-25 – lower than it was expected to reach pre-pandemic. This increases the Chancellor’s fiscal headroom at the end of the parliament from £18 billion to £28 billion, the equivalent of a further 4 to 5p cut in the basic rate of income tax.

Torsten Bell, Chief Executive of the Resolution Foundation, said: “In the face of a cost of living crisis that looks set to make this Parliament the worst on record for household incomes, the Chancellor came to the dispatch box yesterday promising support with the cost of living today, and tax cuts tomorrow. Significant measures were announced on both counts, but the policies do not measure up to the rhetoric.

“The decision not to target support at those hardest hit by rising prices will leave low-and-middle income households painfully exposed, with 1.3 million people, including half a million children, set to fall below the poverty line this coming year.

“And despite the eye-catching 1p cut to income tax, the reality is that the Chancellor’s tax changes mean that seven-in-eight workers will see their tax bills rise. Those tax rises mean the Chancellor is able to point to a swift fiscal consolidation and significant headroom against his fiscal rules.

“The big picture is that Rishi Sunak has prioritised rebuilding his tax-cutting credentials over supporting the low-to-middle income households who will be hardest hit from the surging cost of living, while also leaving himself fiscal flexibility in the years ahead. Whether that will be sustainable in the face of huge income falls to come remains to be seen.”

Inflation-nationDownload

Construction: Start performance continues to decline, but negative curves start to soften

  • Planning approvals and main contract awards rally, indicating future recovery
  • Value of underlying work starting on-site (less than £100 million) during the three months to February fell 12% against the preceding three months, down 30% compared with the previous year
  • Residential project-starts performed poorly, with the value declining 21% against the preceding three-month period to stand 46% lower than a year ago.
  • Non-residential work starting on-site increased 1% against the preceding three months but fell 2% compared with a year ago
  • Civil engineering-starts slip back 17% against the preceding three-month period to stand 34% lower than the previous year.

Glenigan, the construction industry’s insight expert, has released the March 2022 edition of its Construction Index.

The Index focuses on February 2022, covering all projects with a total value of £100m or less (unless otherwise indicated), with all figures seasonally adjusted.

It’s a report which provides a detailed and comprehensive analysis of year-on-year construction data, giving built environment professionals a unique insight into sector performance over the last 12 months.

Silver Linings

Although decline continued into February, making it the weakest on record, performance-wise since 2015, a strengthening pipeline of planning approvals and main contract awards indicates future, if not immediate, recovery.

This month’s Index shows that, the downward curve, which has persisted since spring 2021, is starting to soften. Supply chain issues might continue to bite, but are less aggressive in material terms.

Glenigan Index March 2022.png

However, socio-economic ructions caused by the Russia-Ukraine situation will no doubt have an effect as fuel and energy prices are likely to rocket in Q.2 and Q.3. However, the full impact is still too early to appreciate.

Sector Analysis – Residential

Private housing experienced one of the worst overall performances of any sector during this period, with the value of project starts declining by 23% against the preceding three months (to February 2022), standing 50% lower than a year ago.

Social housing fared little better, having remained relatively robust in the preceding months, falling 16% during the period and 26% compared with the previous year.

Looking at the sector overall, work commencing on site fell 21% during the three months to February, and were 46% lower than the previous year.

Sector Specific – Non-Residential

It was a mixed bag in the non-residential sector, however, a few trends are starting to emerge which indicate post-COVID resurgence.

Last month, the Index reported that hotel & leisure grew (23% on the preceding year, and 35% in the three months to January). Once more, the sector has increased performance-wise, standing 23% on the preceding the three months to February and 7% higher than a year ago.

Community & amenity was another March index high-riser, experiencing a spike in activity. Starts jumped 28% against the preceding 3 months and 38% compared with a year ago.

Industrial-starts, the consistent star performer in Index terms, declined 17% during the three-month period covered by the Index. However, the vertical remained steadfast, up 19% on the previous year.

Sprinting ahead, office construction-starts increased by nearly a fifth (17%) in the three months to end of February, but fell marginally short compared to 2021 levels (-6%)

Education and health-starts fell, reflecting a steady decline in both sectors, which will no doubt throw the Government’s levelling-up policy open to scrutiny.

Whilst infrastructure construction-starts indicated green shoots of recovery, increasing 2% during the three months to February, the value fell 27% compared to 2021.

Modest increases will be tempered by another sharp fall for civils work, down 17% against the preceding three months and 34% compared with a year ago. The utilities sector added further salt to the wound once again posting big losses in start terms, falling 43% against the preceding three months to February to stand 48% lower than a year ago.

Regional Analysis

The North East was the best performer during the three months to February, and the only one that experienced growth against this period and 2021 (+6%).

Inconsistency reigned supreme in the other regions. Scotland experienced the greatest increase in project starts against the preceding three months (+13%), but was down 36% on a year ago. Similarly, project starts in London declined by over a quarter (26%) compared to 2021, but increased during the three months to February. The South East was the only other region to experience growth against the preceding three months (+4%).

Unfortunately, all other regions returned poor performances. The value of project starts fell in the West Midlands by 41% during the three months to February, standing 54% lower compared to a year ago. Strong declines were also seen in the East Midlands, East of England, North West and South West on both the Index period covered and 2021.

Commenting on the Index’s findings, Glenigan’s Senior Economist, Rhys Gadsby says, “We urge readers of this Index to maintain a positive outlook. Whilst project starts remain low, the downward curve is softening and, as our most recent Forecast predicted, a gradual rise in the latter half of 2022 is likely.

“External events are skewing the market and no doubt current geopolitical events in Eastern Europe will create some challenges. However, the UK construction industry is incredibly resourceful, and the strong pipeline of planning approvals and contract wins is testament to this. In our view it’s very much a case of ‘keep calm and carry on’.”

To find out more about Glenigan, click here.

Scottish construction shows signs of strong recovery

Scotland demonstrates strong growth in the wake of pandemic and despite supply shortages

  • Scotland leads post-COVID industry recovery, growing 124% on the value of project-starts compared to last year
  • UK value of underlying work (less than £100 million in value) up 35% on 2020 figures but down 16% on preceding three months on a seasonally adjusted basis
  • Nationwide, retail proves a stand-out sector with 150% growth on project-starts, and residential project starts rise by over a third on previous year

Glenigan, the construction industry’s leading insight and intelligence experts, has released the August edition of its Construction Index.

This report provides a detailed and comprehensive analysis of year-on-year construction data, giving built environment professionals unique insight into results from the second quarter of 2021 and the last twelve months.

Strong growth for Scotland

Scotland has been leading the Covid-recovery, achieving strong growth of 124% on the value of project starts against the previous year, this is despite a 15% dip compared with the previous three months of this year.

UK-wide signs of increase

Despite a slight setback for underlying work (less than £100 million in value) in Q.2 of this year dropping 16% on Q.1, the construction industry is regaining its feet. A rise of 35% on figures in the same time period in 2020 show a sector on the way up.

Residential work on the rise

The value of residential work being carried out on-site is also on the rise, climbing 36% against the previous year. However, this fell 28% compared with the preceding three months (seasonally adjusted) and is down 33% on 2019 figures.

Private housing has also shown growth as one of the best-performing sectors, with the value of project-starts rising by over half (54%). Again, these figures are off the back of an initial dip, down 29% on the preceding three months of this year and 32% on 2019 levels.

Retail and offices provide boost

Retail was the stand-out sector during the period, with project-starts having increased 150% against the previous year up 34% compared with the same period in 2019. Retail-starts also increased 83% compared with the preceding three-month period.

Non-residential sectors also performed above 2020 figures, climbing 43% and increasing by 7% in Q.2 on three months previous.

Health projects show vitality

Despite a slight dip in health project starts in Q.2 of this year falling 12% on Q.1, the sector has seen a 7% rise on the previous year and a 43% increase on the same period in 2019.

Similarly, hotel and leisure project-starts have performed poorly in recent months, however, sector growth has nearly doubled against the previous year (94%) and increased 52% on Q.1 of 2021.

Improvement needed for infrastructure and civil project-starts

An area in need of improvement is underlying civil engineering project-starts which increased just 1% on 2020 but fell 41% on the preceding three months. This was also down 40% compared with the same period in 2019.

Infrastructure starts were also down 16% on the previous year and 49% compared with Q.1 of this year. The sector was also declined by 43% on the same period in 2019.

However, utilities starts show much more promise, increasing by nearly a half on 2020 (47%) but down 18% on the preceding three months of Q.1 of this year.

Strong regional performance

Yorkshire and the Humber also achieved three-digit growth on 2020 (110%) and project-starts in London climbed by over 50% against the previous year but was down 9% on Q.1

Project-starts in the East of England also rose by 58% against last year and were the only region to experience growth against the preceding three months (6%).

Rhys Gadsby, Glenigan’s Economic Analyst, commented on the latest figures: “The positive figures we’ve seen in Scotland serves as a strong indicator the construction sector recovery is not limited to London and the South East.

“However, they should be note of caution. While the value of project-starts remains substantially higher than the lockdown-affected previous year, the value has continued to decline in recent months.

“Material supply problems may have contributed to the fall; however, a decline was expected following a surge in activity, due to pent-up demand, during the first quarter.

“More positively, the speed of decline slowed during July. Main contract awards and detailed planning approval were high compared with previous years, so it is only a matter of time before this has a positive impact on project-starts.

“Furthermore, the successful vaccination roll-out, as well as the ending of restrictions on daily life, should give investors – particularly in non-residential sectors such as hotel & leisure – the confidence to progress projects to site.”

To find out more about Glenigan’s expert insight and leading market analysis click here

General Election ’17: What if the Greens had stood?

LUKE CAMPBELL reckons we could have seen some different results had the Greens contested more seats in the recent general election …

In the 2017 snap General Election the Scottish Green Party fielded just three candidates – Lorna Slater contested Edinburgh North and Leith, Patrick Harvie (Co-convenor and List MSP for Glasgow Region) stood in Glasgow North, and Debra Pickering was the first ever Green candidate in Falkirk for a UK parliamentary election.  Continue reading General Election ’17: What if the Greens had stood?

42% of young voters steered clear of snap General Election

LUKE CAMPBELL reflects on the general election results and says more must be done to engage young people in the democratic process:

A YouGov poll, published on Tuesday 13 June has suggested that UK-wide 42% of all eligible voters aged under 25 did not vote in the snap General Election of Thursday 8th June (writes Luke Campbell). Continue reading 42% of young voters steered clear of snap General Election