The UK jobs market hit a two-year high in February as the British economy emerged from the coronavirus pandemic and final restrictions were lifted.
According to the latest edition of accountancy and tax consultancy network BDO’s business trends report, the employment index rose for a fourth consecutive month to 110.75, representing a monthly gain of 0.77 points.
This was the first time the labour market had returned to pre-pandemic levels, the accountancy firm said, since February 2020 when it came in at 112.86. The index now sits above the 95 level which indicates growth.
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The easing of restrictions provided a large boost to business optimism in February. As businesses fully re-opened and resumed normal operations, they have also been looking to hire more staff to cope with increased demand.
A shortage of workers due to Brexit and the pandemic has also made competition for employees fierce, the report said. Together, these factors have placed upward pressure on employment figures.
BDO’s optimism index increased 0.9 points to 105.81 during the period, marking a second consecutive month of improvement following December’s Omicron-related dip.
This rise was primarily driven by the services, which covers retail, hospitality and leisure among other industries. The index jumped by 0.94 points in February to reach 105.24 – its highest reading since July 2021 – reflecting the impact that remaining restrictions had on consumer-facing businesses.
However, this rise in optimism could be short lived. The impacts of Russia’s war on Ukraine are expected to weigh heavily on inflationary pressures, adding to existing concerns around the cost of living, which could see confidence decline in the coming months.
“Propped up by the government’s furlough scheme, the UK jobs market was largely resilient throughout the pandemic. As we emerge from a series of lockdowns and return to normality, the jobs market is now moving from resilience to growth, reflected in February’s buoyant figures,” Kaley Crossthwaite, Partner at BDO, said.
“While it’s promising to see growth in business optimism throughout February, this could be short lived as inflation continues to rise at a faster rate than wages. Inflationary pressures are set to mount further over the coming months, with energy and fuel prices key drivers of this increase.”