Glass half full or half empty?
Posted on 12th August 2019
The July Markit report
Statistics can be seen through whatever prism you want. In these fevered times, with Brexiteers, Remainers, those seeking independence for Scotland and those who wish to defend the union all getting very excited, there is rather a lot of manipulation of data for political purposes. That’s understandable, but what’s not, in my opinion, is anyone wishing for decline and disaster simply to prove a point. If said decline and disaster come so be it, but in the meantime it’s incumbent on commentators to realise that what’s written and said can affect people’s jobs and livelihoods. Consequently, while we should try and interpret the stats honestly, especially the ONS figures, the PMI index and the monthly Markit/RBS survey of the jobs market, we should also see the good amongst the bad. Why would anyone not want the economy to do well and provide jobs and money for us all?
Let’s start with the bad. Last week the ONS declared in its first estimate of the figures (to be revised in due course, up or down), that growth in the second quarter of the year was -0.2%, down from stronger growth of +0.5% in the first quarter, partially attributable to investment/stockpiling in the event of Brexit happening. Some economists think that with Brexit now looking much more likely (whether no-deal or an agreement), there will be a similar wee boost in the third quarter as firms gear up for the denouement of the entire Brexit debate/debacle (take your pick!). The idea that there may be a slight uptick in the third quarter is given some support by the fact that the PMI for services actually picked up in July. However, despite the fact that services are the dominant force in the UK economy, albeit growing only by a tiny 0.1% in the second quarter, there is no doubt that manufacturing, which shrank by 2.35% in the same period, will also have a part to play in determining if/when we go into a recession, with two quarters of negative growth.
Where does all this leave the IT jobs market? Well, from Be-IT’s perspective, we’ve seen a slight softening over the last quarter. We’re still going like a fair, but there has undoubtedly been slightly less demand. That said, the supply of quality candidates remains as elusive as ever and shows no sign of getting better in the near future.
The jobs market in Scotland has been in reasonable health for a long time now. Consequently, the first signs of decline in the perm market, however small, cause comment and concern. Overall, the perm placements index fell below the 50 threshold (50 indicating growth) for the first time since January 2017. In IT, the perm jobs figure declined from 66 in June to 61.5 in July, so our sector is still in seriously positive territory.
On the temp/contractor front, the authors of the Markit survey note that this decline in permanent roles is counterbalanced by a rise in demand for contractors, possibly/probably as firms seek short-term solutions to labour while they wait to see what’s happening with Brexit. The overall temp market in July was healthily positive, with temp billings, which had declined slightly in June, rebounding to a much more satisfactory figure of 54.2 in July. Within this, as you can see on the table below (which also has the perm figures), IT is growing – something we’re also seeing reflected at Be-IT via increased demand for contractors. Whether this will continue is open to conjecture as it will depend on what happens with the all-consuming subject of Brexit. And as we’ve seen, the fluctuations in temp and perm markets over recent months reflect this preoccupation. What businesses want is clarity (how many times have you heard that!?).
On that subject, those who know me are well aware of my not entirely charitable thoughts on our new Prime Minister. Nevertheless, in my opinion (and in contrast to his miserable predecessor), he’s providing the clarity that business has constantly said it wants. Whether the clarity he’s providing is what business actually wants is another matter…
Now it is quite possible a Borisonian reverse ferret is coming our way, but at present I can’t see it. Only time will tell, but for now he is unequivocal that we are leaving the EU come what may on 31stOctober. While many hate his message, we can’t argue that it’s not clear at present. And in amongst his sunny-side up, relentless, arguably OTT optimism are two things that are vital for our future prosperity.
These are, 1) a reordering of the immigration laws, so that we can recruit talent from anywhere in the world, and 2) a massive, extremely rapid expansion of our broadband network so we have the fibre capability of all our major competitors. We are currently so far behind far smaller economies than ours in providing full fibre cable that it’s an embarrassment.
Even if Brexit does happen and turns out to be the biggest disaster since Lord Raglan asked the Light Brigade to charge some Russian guns at Balaclava or the Titanic’s captain asked if anyone wanted more ice in their gin, these two are essential for the UK to compete in the coming decades. Boris’s emphasis on IT must continue, whichever party is in power. Jobs and livelihoods depend on it.
Gareth Biggerstaff, CEO, Be-IT
.. Back to Blog