The Grand Old Duke of York (not to be confused with the current one), famously got a bit confused about figures, claiming that when they were up they were down and indeed vice versa. I felt a bit like that on reading the September RBS/Markit report.
The headline in last month’s report tells us of the “Fastest drop in permanent placements since 2017”). However, as also noted in the first paragraph of the report, “Temp billings grew sharply, and for the third month in a row, as there were further signs of employers taking on short-term staff to fulfil roles.” Furthermore, “permanent and temporary candidate availability deteriorated sharply. Falling labour supply continued to place upward pressure on pay. However, vacancy growth slowed in September.”
I am sure you’ll be aware that there are some smoke signals (inverted yield curves, increasing protectionism/trade wars, falling manufacturing indices, etc.) warning us that a recession might not be far away. Moreover, you’ll also know that the PMI index for construction as a whole across the UK is, as I noted last month, not looking healthy. Also as noted in my comments on last month’s Markit report, the UK-wide stats, produced by KPMG/REC with Markit, show construction employment well below the magical 50 number that indicates growth. The decline in perm placements highlighted by RBS/Markit for Scotland also suggests a downturn may be coming, however, it is still worth stressing that we’re seeing employment growth, in perm and temp, in most sectors north of the border, including construction/engineering and blue collar, albeit slower than before.
If you look at the table below (taken from the Markit report, you’ll see there is a bit of a gap between the sectors that continue to perform well and those where the decline has been more evident.
This is particularly apparent on the temp side where the month-on-month decline in the bottom four sectors is marked, but the best performing, including Construction and Engineering, have not varied much from the previous month. On the perm side of the table, as you can see, while other job markets are clearly declining (any figure less than 40), Construction is still growing compared to the bottom three.
Overall, there is no disguising the trend. Where there is growth, it is slowing, and where there is decline it’s becoming steeper, with the prospect of more to come in some sectors. Like most people who run businesses, I want an end-game for Brexit. More uncertainty is not good for business, yet that’s seemingly what’s on offer for few more months if not more. In the meantime, let’s not talk ourselves into a recession, and if one is coming then the construction industry, and especially government-led housebuilding and infrastructure should play a key role in helping us build a way out.
Chris Peace, MD, Peace Recruitment