Contractors look set to benefit from increased and sustained demand, with this month’s crop of labour market and economic data pointing towards candidate shortages in numerous sectors and regions. As a result of careful targeting, contractors who apply themselves can reap the rewards. Improved confidence in the economy has also played its part, with companies looking to support growth by increasing their contractor headcount. Construction and engineering contractors look to be in particular demand, whilst prospects also look promising for finance and IT contractors in London.
In this month’s ContractorCalculator Market Report:
- Contractor demand is expected to benefit from improved confidence in the economy as clients increase headcounts, reports the Recruitment and Employment Confederation (REC) JobsOutlook for September 2015.
- The contractor shortfall in Scotland continues to worsen, stunting economic growth in the process, says the Bank of Scotland Report on Jobs.
- The Recruitment and Employment Confederation (REC)/KPMG Report on Jobs reveals that infrastructure projects may slow down due to acute skills shortages.
- Morgan McKinley’s London Employment Monitor for September 2015 reports a significant year-on-year increase in demand for contractors in the finance and IT sectors.
- Declining output in the manufacturing industry means opportunities in the sector for contractors could actually grow, as clients choose risk managed approaches to staffing, says the Quarterly Industrial Trends Survey from CBI.
Contractors to benefit from sustained demand, says REC JobsOutlook
Contractor demand looks set to benefit from improved confidence in the economy as clients report plans to increase contingent worker headcounts beyond the New Year.
This is according to the Recruitment and Employment Confederation’s (REC) JobsOutlook for October 2015, which shows that 38% of clients plan to increase their contractor headcounts before the end of the year. Medium term prospects look equally promising.
In addition, more than three quarters of organisations consider domestic economic conditions to be improving, and so many are willing to explore means of adding resources to increase headcount and improve trading prospects.
Construction contractors can expect to be in particular demand, with 11% of respondents expecting a shortfall in suitable candidates in this sector, whilst 16% are anticipating a skills shortage in the engineering industry.
Contractors’ value in providing short-term access to key strategic skills was highlighted by the study, with 79% of clients considering this factor to be of particular importance in their decision to use contractors.
“With the continued overall improvement in the economic climate, the contingent workforce can expect to find demand for their services remains strong for quite some time,” highlights ContractorCalculator CEO Dave Chaplin.
Contractor shortfall in Scotland worsens, creating opportunities for wider UK
Contractor candidate shortages intensified in Scotland throughout September 2015, whilst agency billings, demand and rates all increased, suggesting contractors short of work elsewhere in the UK should consider relocating.
The latest Bank of Scotland Report on Jobs for September 2015 highlights that, while Scotland’s contracting sector has performed strongly throughout the year, the availability of contractor candidates is failing to match demand for their services, stifling economic growth.
“[The findings] suggest that business confidence in the Scottish economy is holding up despite the slowdown in growth evident earlier in the year,” highlights Donald MacRae, Chief Economist at Bank of Scotland.
Despite the shortfall in candidates, contractors who are operating in Scotland are benefitting from strong market conditions, with contractor agency billings rising for an eighth successive month during September, at a better rate than that across the UK as a whole.
Dundee’s video gaming sector witnessed the fastest increase in temporary billings, ahead of Edinburgh, but also recorded one of the sharpest decreases in contractor availability, alongside Glasgow.
Meanwhile, the IT and computing sector sits ahead of the video gaming industry in first place in the demand league table. The accounts and financial category is in sixth place, but still very much in growth territory.
Lack of contractor availability impacting key infrastructure projects
Contractor agency billings continued to fall during September 2015, with skills shortages in engineering and construction now considered so acute that a slowdown in infrastructure and housebuilding projects is anticipated.
This is according to the Recruitment and Employment Confederation (REC) and KPMG September 2015 Report on Jobs, which shows contractor agency billing growth to have risen at the weakest rate since May 2013.
“The pool of available skilled labour shrank yet further in September, dampening growth of both permanent and temporary placements,” highlights KPMG Partner Bernard Brown.
Whilst this appears to paint a bleak picture, it does suggest a contract-rich environment, as ContractorCalculator CEO Dave Chaplin explains:
“Contractors who are having difficulty finding contracts may need to look further afield, as demand for their services exists if there are available candidates for agencies and clients to hire.”
The accounting/financial sector maintained a strong position in the contractor demand league table, coming in second, however it also reported the biggest candidate shortage.
At the other end of the spectrum, demand for construction contractors has fallen, presumably due to clients adopting a skills hoarding strategy and targeting permanent hires as a result of the recent housebuilding boom.
Finance sector remains buoyant for contractors, despite dip in demand
Contractor prospects in London’s financial sector remain promising, with figures revealing a significant increase in terms of long-term growth in the market, despite a slight dip month-on-month.
Morgan McKinley’s London Employment Monitor for September 2015 indicates a 12% increase in available positions when compared with September 2014. This rounds off a strong quarter, with figures showing a year-on-year increase in candidates of 52%.
This comes in spite of a 14% decrease in demand since August, which was largely attributed to a slow start following holiday season.
“We only started seeing a pickup in activity during the second half of last month. This explains the monthly decrease in jobs,” explains Hakan Enver, operations director, Morgan McKinley Financial Services.
The finance sector also leads a broad-based increase in income in the capital, with the Association of Professional Staffing Companies (APSCo) reporting an increase in rates of almost 6% in the sector. As well as finance contractors, IT contractors are also highlighted as being particularly sought after.
Manufacturing contractors could be key to industry recovery
Investment in manufacturing contractors could be key to reviving and re-initiating growth in the sector, once conditions have stabilised. And counter-intuitively, the downturn in production during the three months to October could result in increased demand for contingent workers such as contractors, as clients choose a lower risk hiring strategy.
The CBI Quarterly Industrial Trends Survey suggests that, despite the current downturn, overall conditions are expected to improve over the next quarter. Reductions in overseas export orders were largely to blame for a -8% balance in terms of in new orders.
Subsequently, a decrease in output volumes has also been recorded, with firms reporting an overall balance of -4%, below the average of +1%. However, this has not yet translated into falling headcounts, with firms reporting a positive balance of +3% in this regard.
Hiring prospects for contractors in the industry look set to improve, as Rain Newton-Smith, CBI Director of Economics, emphasises the important role that future investment in contractors can contribute to growth within the sector:
“Over the long term, strong investment in innovation and skills is vital to boosting our performance in exports, enhancing our manufacturing growth and improving productivity.”