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Demand for staff at record levels as UK business output reaches seven month high

Trends also show rising output in both manufacturing and services industries off a strengthened domestic outlook and lower inflation

While company output optimism declined, it was not enough to dampen hiring intentions

Hiring intentions at UK businesses are reaching record levels while business output has hit a seven month high, new research has indicated.

Improvements in manufacturing and services output are driving the demand, according to data compiled by accountant and business advisor BDO.

Rises in employment index unaffected by reduced business optimism

BDO’s employment index in March recorded its highest ever reading, as companies invested in people rather than capital due to low wage growth.

Both the services and manufacturing sub-indices rose in rose in March as a result of strengthening domestic outlook and a better inflation outlook.

One cautious note was a decline in BDO’s optimism index, which reflects how firms expect output to develop in the next six months, although this was not enough to dampen hiring intentions.

Peter Hemington, a partner at BDO, said: “The performance of both the manufacturing and services sectors is encouraging for the health of the UK economy and the data suggest that there will be an improvement in GDP growth over the next few months.

He added: “Businesses are retaining a positive outlook, and this may add to the pressure that the MPC feels to raise rates.

"But the recovery remains patchy and febrile with Brexit looming the MPC must hold fast and keep interest rates to a minimum to encourage confidence and growth for UK businesses.”

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