Hiring intentions among UK businesses rose strongly in July to surpass their pre-crisis figure and reach their highest level since 1998, according to the latest Business Trends report by accountants and business advisers BDO LLP.
The BDO Employment Index, which predicts companies hiring intentions in three months’ time, rose from 108.8 in June to 109.6 in July, indicating that job creation will continue to accelerate for the remainder of the year. A significant uptick in hiring intentions among services firms in particular has driven July’s gains, suggesting that graduates from the class of 2014, many of whom will be looking to start their careers this summer, face the most encouraging job prospects of any graduation class since the onset of the financial crisis.
The buoyant services sector also positively influenced the BDO Output Index, which predicts companies’ performance three months ahead. Economy-wide output rose from 103.6 in June to 103.7 in July, mirroring the 0.1 rise reported by the Output Sub-Index for the dominant services sector, which accounts for over two-thirds of the economy.
The BDO Optimism Index, which predicts businesses’ expectations over a six month horizon, rose from 104.8 in June to 105.1 in July, as both services and manufacturing firms reported gains. This reading, which stands at its highest level for over a year, indicates continued above-average growth in the economy over the medium-term, although the rate of acceleration in business confidence appears to be levelling off.
Inflationary pressure is likely to be a key reason behind the longstanding levels of confidence among businesses. The BDO Inflation Index remained broadly unchanged at 97.6 in July, far below the long term average of 100 and only just above the 95 mark that indicates costs are rising. Labour-intensive services firms in particular continue to benefit from weak cost pressures, as spare capacity in the economy undermines wage growth.
Commenting on the findings, Peter Hemington, Partner, BDO LLP, said: “The good news is that the unprecedented growth we’ve seen in UK employment this year looks set to continue, providing this year’s university graduates with a welcome dose of good news in terms of job and salary prospects.
“However, we’re hearing that services firms are beginning to echo manufacturers in voicing their concerns over a shortage of skilled workers and some construction businesses are already turning business away due to a lack of trained staff. This could bring the stellar growth we’re enjoying in the wider economy to a grinding halt if the trend becomes entrenched.
“To address this, the Government must ensure its protectionist tendencies are put on hold until productivity returns to pre-crisis levels. Although a new wave of graduates will go some way towards meeting businesses’ needs, readily available and flexible labour from Europe could relieve pressure on businesses in the short term.”
Whilst dictating resource allocation and capital planning, CFOs in the modern era are presented with a challenge of balancing short-term earnings targets and appeasing shareholders whilst also adhering to long-term strategic plans. Often, in more complex organisations, the trick a CFO has to achieve is to weigh the requirements of a portfolio holistically rather than by division, identifying and exercising organisational synergies where possible. These challenges underpin one of the clearest indicators of the step-change in a modern-day CFO’s remit; namely the extended involvement in a company’s growth planning. Arguably this in itself is an area where many CFOs would like to have additional influence but the escalation of CFO input into M&A targeting, organic growth and new market development at the conceptualisation phase is palpable across many corporate boardrooms. For CFOs, the invitation to bring their pragmatic voice to the start of these growth discussions and not just when due diligence or financing is required, is a water-shed moment. Coupled with the additional expectation of managing reputational risk and increasing investor relations leadership, the new corporate CFO is encountering a world with abundant demands, more opportunities and a truly all-encompassing position within an organisation’s hierachy.
Overview of the BDO indices:
The second question presents a similar theme of a notionally simplistic question which also raises broader points. Why this organisation? is a question one should try and answer as fully as possible prior to an interview. Do you really understand their business strategy, the market they operate in, the challenges and opportunities they may face? What about the culture of the firm, have you managed to get a sense of it before meeting them? Have you explored their external reputation? What makes this firm unique? Are they an innvoator? Do they have a strong brand presence? Perhaps the organisation is at an interesting phase of its life-cycle, perhaps a transformation is underway? Are you able to capture the “mood” of the business and understand how the future is shaping for this business? The second question also raises a point about culture and whilst it is dangerous to assume to know any organisation’s culture, there are many who have great reputations for how they manage their people or the integrity of their business philosophy. Some are more hard-nosed and direct, maybe reflecting their markets. Does either relate well to your approach to business? Again, we can see how a fairly simple question on the surface can be expanded to a more detailed and exploratory discussion.
I would encourage any person at any level entering into a process to really consider these two questions and how best they can answer them – not just to the interviewer but first and foremost, to themselves so they are able to make the best choices in their own careers. It may sound simple but as the market tightens and the demand for ever higher calibre candidates intensifies, those who truly engage in a process in this way, by systematically considering all possible factors for a move, will ensure they are in the best position to deliver to the heightened external expectations.