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Private sector hiring hits 19-month high

Business optimism is improving if the results of BDO’s Employment Index are anything to go by.

The index, which measures private sector hiring intentions over the next two quarters, has hit a 19-month high.

It is the third month in a row that the index has been above the crucial 95.0 mark, which indicates growth. And the figures suggest that private firms will help to offset the effects of expected public sector job cuts.

Peter Hemington, partner at BDO, said it is encouraging to see improvement in hiring intentions, especially in light of the public sector payroll cuts which will no doubt add pressure to the employment rate.

However, confidence among manufacturers tumbled to 88.2 in March from 94.5 in February. Weak demand from domestic consumers and struggling eurozone import partners is no doubt weighing on the mind of those in the industry.

Despite the boost in hiring intentions, businesses still do not expect to see the economy grow in the next two quarters.

BDO’s Output and Optimism indices, which predict short-run turnover expectations and business performance a quarter and two quarters ahead, are currently at 93.0 and 92.2 respectively. These figures are well below 95.0 which indicate economic conditions will remain tough until at least mid-2013.

Hemington described the plunging confidence of manufacturers as a “particular cause for concern”.

He added, “A fundamental part of the Government’s rebalancing strategy is the encouragement of UK manufacturing. So, it was disappointing to see little action taken in last month’s Budget to help this beleaguered sector.

“In particular, a time limited increase in capital allowances would have been a good step to take in order to encourage the manufacturing industry to invest and grow.”

Elsewhere, BDO completed its merger with PKF last week.

The firm, which is expected to generate revenues of around £400 million, will now operate as one under the BDO brand as part of the company’s international network.

It will have a network of 24 offices across the country, with 3,500 staff members including 300 partners.

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