Business are planning to hire workers at a rate not seen since June 2008 mirroring a rise in optimism, according to a survey.
But the number of candidates available for job vacancies declined sharply in March, which weighed on an increase in permanent staff placements and drove up wages, according to the Bank of Scotland Report on Jobs.
Scottish firms’ hiring intentions reached a six-year high, according to the latest Business Trends report by accountants BDO.
BDO’s Employment Index jumped from 102.7 in February to 104.3 in March, a move which is “markedly above trend” and points to expansion in the labour market, BDO said.
The Bank of Scotland jobs report found that demand for workers increased for the 13th month in a row in March, although at a slightly slower rate than February. The drag was caused by the drop in the number of candidates available to Scottish recruiters, the most marked since the survey began in 2003, the bank said.
But the still strong demand meant that pay for both permanent and temporary workers rose in the month, albeit not as much as it rose in February.
Donald MacRae, chief economist at Bank of Scotland, said: “The Barometer reading for March was the joint-second highest in the history of the survey reaching pre-recession levels. “The number of people appointed to jobs increased accompanied by a strong rise in job vacancies during the month. The number of candidates available for permanent jobs fell contributing to a robust rise in starting salaries. This tightening jobs market provides more evidence of increasing business confidence and embedding of the growing recovery.”
BDO’s index found business’s optimism returned to January’s all-time high of 103.8 in March (up from 103.3 in February). This positive outlook was particularly strong among manufacturers, the firm said, adding that output also reached its second highest reading in March.
BDO said persistently low inflation is likely to have contributed to growth expectations, but firms are now at risk of facing a skills shortage and spiralling wage inflation.
Martin Gill, partner and head of BDO in Scotland, said: “Our data shows that employers are growing their hiring intentions month on month.”