Contractors are well placed to take advantage of the UK’s fragile economic recovery, as they offer a winning combination of flexibility and skills to businesses unwilling to commit to recruiting permanent employees in these uncertain economic times. Engineering and IT contractors are in particular demand across the manufacturing, business services and financial sectors. However, the UK’s economic recovery is uneven and contractors should stay aware of changeable market trends to ensure that they’re targeting sectors that are expanding capacity for future growth.
In this month’s ContractorCalculator Market Report:
- Engineering and IT are the third and fourth fastest growing sectors of online recruitment, according to the latest Monster Employment Index (MEI), which is back in positive growth territory after a downwards blip in March
- CBI/PwC survey: a strong rebound in financial sector performance coupled with plans for IT investment growth not seen since 1993 bode well for IT contractor prospects
- Contractors see recruitment growth in manufacturing and construction, but new job creation in services is flat, according to May’s Markit/Chartered Institute of Purchasing and Supply (CIPS) Purchasing Managers’ Indexes (PMIs)
- The sharp private-public sector divide in recruitment is highlighted by the latest quarterly Chartered Institute of Personnel and Development (CIPD)/KPMG Labour Market Outlook, which suggests contractors should look to exporters for new work
- Engineering and IT contractors are desperately needed to plug the UK’s ‘serious talent shortage’, according to the results of the Manpower Talent Shortage Survey 2011.
IT and engineering contractors continue to lead online labour market demand
Engineering and IT are the third and fourth fastest growing sectors for online recruitment respectively, after transport, post and logistics in first place and construction and extraction in second, shows April’s Monster Employment Index (MEI).
In contrast, online demand in the public sector is weakening. Online worker demand in the category MEI calls ‘public sector, defence and community’ fell by nearly 9% compared to March, and by over a quarter when compared to July 2010, when demand was at a 12-month high.
As the headline index moves back into positive territory after a slight fall in March, Monster spokesperson Isabelle Ratinaud is upbeat in her assessment of the UK labour market, and highlights key contracting client sectors as being particularly buoyant.
“The Monster Employment Index for April demonstrates a positive forecast for worker demand around the UK,” she says. “In particular, the technical and industrial sectors have seen a boost in activity.”
Financial IT contractors benefit from the ‘best result since the financial crisis began’
IT contractors working in the UK financial sector, the single largest consumer of IT contractor services in the UK, will benefit from levels of business in the financial services sector “only slightly below normal” and the “best result since the financial crisis began in September 2007”.
This is according to the latest Confederation of British Industry (CBI)/PwC Financial Services Survey, which also confirms that the UK’s financial services sector has seen activity grow strongly for the third quarter in a row, in the three months to March.
Demand for financial IT contractors directly correlates to the health of the UK’s financial sector which, according to the survey, is planning to invest in information technology at the highest level since 1993.
“A third quarter of strong volume growth shows the financial services recovery is building strength,” explains CBI Chief Economic Adviser Ian McCafferty. “It is particularly good news that firms consider their level of business to be only slightly below normal, for the first time since the financial crisis began in 2007.”
Construction and manufacturing sector jobs growth, although services sector is flat
Contractors working in the construction and manufacturing sectors continue to enjoy ‘buoyant’ recruitment, despite the softening of growth in the manufacturing sector. And although the services sector continues to grow, new contract creation is flat.
The Markit/Chartered Institute of Purchasing and Supply (CIPS) Manufacturing, Construction and Services Purchasing Managers Indexes (PMI) all show sustained growth in May, albeit at a slower rate in the manufacturing and services sectors. Activity in the construction sector has strengthened in the last month, buoyed by new orders and the resumption of mothballed projects.
There seems to be consensus that the ‘excess’ of bank holidays in April have had a marked impact on performance in the period. For example, CIPS CEO David Noble says: “The [services] sector stayed on a growth trajectory despite the hindrance of the additional bank holidays in late April, which ... also had an impact on manufacturing activity over the same period.”
Contractors should look to exporters, and not the public sector, for new contracts
Contractors should focus their sales and marketing efforts on manufacturers that export. According to the latest quarterly Chartered Institute of Personnel and Development (CIPD)/KPMG Labour Market Outlook, businesses with the most optimistic hiring intentions are manufacturing exporters. In contrast, employment and contract prospects in the public sector have nosedived.
The survey also highlights that the cap on non-EU immigration is causing skills shortages in IT, engineering, accountancy and finance, as 16% of private sector organisations have been prevented from hiring highly skilled migrant workers as a result of the temporary cap introduced in April 2011.
The survey forecasts that the private sector will continue to generate new jobs throughout the crucial second quarter of 2011, with exporting manufacturers leading growth. At the same time, public sector spending cuts are expected to take effect on the recruitment and contracting market in this period.
“Business confidence is growing in Europe, with more than half of business leaders optimistic about growth through joint ventures, collaborations and acquisitions,” says KPMG Head of Markets Malcolm Edge. “As a result, business sectors such as UK manufacturers and exporters will continue to see growth through overseas demand.”
Engineering and IT contractors needed to plug the UK’s ‘serious talent shortage’
Highly skilled and flexible engineering and IT contractors are ideally placed to help plug the UK’s ‘serious talent shortage’, which was revealed in Manpower’s 2011 Talent Shortage Survey. The survey reveals that engineers top the table of the ten most difficult roles to fill in 2011, with IT contractors coming in tenth.
Britain is facing a serious talent shortage in certain sectors at a time when unemployment is actually rising
Mark Cahill, Manpower UK
Globally, engineering roles are the fourth most difficult to fill, with IT in eighth place, demonstrating that demand is also strong for engineering and IT contractors outside of the UK. Lack of candidates in general, and a shortage of experienced candidates in particular, are the main reasons clients are unable to fill key IT and engineering assignments.
According to Manpower UK MD Mark Cahill, training in the professions has not kept pace with the skills required: “Britain is facing a serious talent shortage in certain sectors at a time when unemployment is actually rising. Part of the reason we continue to see the same professions feature in the list every year is that the jobs have structurally changed, as have the skills required.”