Jobs Market Improvement Indicated

A continued improvement in the jobs market could see companies' hiring intentions hit a record high later this year, a new report has indicated.

The latest Business Trends research from accountants and business advisers BDO LLP suggested that firms plan to continue growing their workforces at a higher than average rate over the next three months.

At the same time, a separate study by the Bank of Scotland showed a rising number of job vacancies and increases in appointments.

But both reports warned companies could find a lack of suitable candidates when hiring.

The Bank of Scotland Report on Jobs for May said the rate of decline in the supply of candidates for permanent posts was "one of the fastest in the history of the survey''.

It added that this "lack of available candidates'' for jobs was leading to rising salaries.

Donald MacRae, chief economist at Bank of Scotland, said: "May's Barometer showed the Scottish labour market continuing to improve.

"Not only did the number of people appointed to both permanent and temporary jobs increase over the month, but vacancies grew at a robust rate.

"The number of candidates available for permanent jobs fell, resulting in a noticeable increase in permanent salaries.''

Martin Gill, partner and head of BDO LLP in Scotland, said: "Businesses are translating their confidence in economic recovery into action, demonstrated by the sustained increase in hiring expectations.

"But a gap between supply and demand for skilled workers is developing, which could take the momentum out of the recovery.''

The BDO Employment Index, which predicts hiring intentions by businesses over the next three months, increased from 105.6 in April to 107.7 in May - which is just below the previous peak in the research's 22-year history, when it reached 108.9 in February 2007.

The BDO Output Index, which looks at companies' expectations about growth, also rose from 103 in April to 103.3 in May, just short of its highest-ever recorded level of 103.6 in May 2006.

Meanwhile, the Bank of Scotland Report on Jobs for May showed a "sharp and accelerated increase in the number of people placed in permanent jobs''.

But it said this growth in appointments was "much less marked than across the UK as a whole''.

The number of job vacancies continued to rise, the report found, as "demand for both permanent and temporary staff improved''.

It also reported that May "saw continued growth'' in both the starting salaries of those finding new permanent jobs and the hourly rates paid to temporary workers.

A Scottish Government spokeswoman said: "The Business Trends report shows further positive improvements in Scotland's economy, reinforcing recent GDP and labour market data that show the economic recovery gaining ground, and Scotland outperforming the UK in terms of employment and inactivity.

"Business growth and investment will be key to ensuring continued economic expansion over the coming year.

"We are supporting investment of more than #8 billion in infrastructure investment in 2014-15 and 2015-16 to support the economy.

"We have created the most supportive business environment with #590 million of business rates relief through our Small Business Bonus Scheme.

"With the full fiscal and economic powers of independence we could do even more to strengthen our economy and create jobs.''

Commenting on the Bank of Scotland Report on Jobs, Finance Secretary John Swinney said: "I welcome these figures, which show that conditions in Scotland's labour market are continuing to improve.

"This report follows on from last week's positive employment figures, which showed that Scotland has the highest employment rate and lowest inactivity rate of all four UK nations.

"There have been improvements in employment, unemployment and inactivity in Scotland both over the quarter and the year, with the employment level in Scotland increasing for the 16th consecutive monthly release.

"While these figures highlight the continuing recovery in the labour market, we know that with full economic powers of independence there is much more we could do to further strengthen our economy and give business access to the human skills they need to grow and to create even more jobs.''