Contractor prospects are looking very positive. At the coal face, agencies are reporting high levels of demand for contractors across most core disciplines. At a macro level, the UK’s contractor budget holders are starting to invest and spend in new marketing and operations. The interim management sector appears to be the only sector not performing well, but this may be a blip; indeed, public sector demand for interims almost doubled between 2012 and 2013. Overall, barring any global economic shocks, the evidence suggests that the UK, and its contracting markets, are showing growth and recovery.
In this month’s ContractorCalculator market report:
- June’s Recruitment and Employment Confederation (REC)/KPMG Report on Jobs highlights that contractor demand reached a 27-month high and core contractor disciplines dominate the top of the demand league table
- Scotland’s contract market is outperforming the rest of the UK, with IT and engineering showing particularly strong performance, according to June’s Bank of Scotland Report on Jobs
- Despite the slight dip in interim management contractor demand shown by the Interim Management Association’s first quarter of 2013 analysis, the interim segment continues to grow, particularly within the public sector
- The second quarter Institute of Practitioners in Advertising (IPA) Bellwether Report bodes well for marketing, media and IT contractors, as well as the wider economy, as marketing budgets are revised up at the strongest rate in six years
- New contracts should start to flow as the budget holders of the UK’s biggest contractor clients are starting to invest again, according to the latest Deloitte Chief Financial Officer (CFO) Survey.
Engineering takes the lead as contractor demand reaches 27-month high
Contractor demand reached its highest level in 27 months during June 2013. Engineering came top in the demand league table, with its demand index increasing by over 10% month-on-month.
The June 2013 Recruitment and Employment Confederation (REC)/KPMG Report on Jobs also showed that construction was the surprise strong performer, with its growth index recovering from a negative position and eighth place during May 2013 to grow by 17% to reach third place by the end of June. This placed it ahead of IT and computing.
“Roles in engineering and IT are in ever-increasing demand as recruiters struggle to source the talent that businesses need to succeed,” notes REC chief executive Kevin Green. “However, more roles, such as sales and digital marketing, have been added to this growing list in the last couple of months and show no signs of disappearing.”
Scotland’s contractor vacancies grow at sharpest rate in 21 months
Contractor vacancies in Scotland grew at the sharpest rate for 21 months, which was faster than the UK average shown in the REC/KPMG Report on Jobs above. June 2013’s Bank of Scotland Report on Jobs shows that contractor demand increased across all core contracting sectors, except for the interim management market, which fell into negative growth territory.
“Both the number of people appointed to permanent and temporary jobs rose in the month, accompanied by sharp rises in vacancies.Improvements in job market conditions were spread across all sectors,” explains Bank of Scotland chief economist Donald MacRae.
Roles in engineering and IT are in ever-increasing demand as recruiters struggle to source the talent that businesses need to succeed
Kevin Green, REC
Reaching a 12-month high in demand in June, IT and computing contractors rose to second place in the demand league table, ahead of engineering and construction in fourth place, and after nursing and medical care in first place.
Interim contractor assignments fall as public sector placements catch up
Interim management contractor demand fell by 3% in the first quarter of 2013, compared to the final quarter of 2012. The latest Ipsos MORI survey commissioned by the Interim Management Association (IMA) also shows that public sector assignments are on the up, reaching 43% during Q1, a sharp increase from 28% in 2012 Q4. This is despite the introduction of the public sector off-payroll rules in September 2012.
IMA chair and managing director of Russam Interim Jason Atkinson believes the public sector increases will continue: “I’d suggest the results of the survey findings from the second quarter of 2013 will reveal whether we are seeing a real convergence of public and private sector use of interim management.”
Atkinson also highlights that, although assignments dropped slightly during the first quarter, the trend shows continuing improvements: “Despite declines in the number of assignments completed and in progress compared to Q4 2012, overall the survey highlights positive long-term trends.
“When it comes to the number of assignments in progress and new ones being started, they are on an upward curve. And discussion amongst the IMA members indicates that this trend will continue when the data for the second quarter of the year is analysed and presented.”
Marketing and media contractors see strongest growth in spend for six years
Marketing and media contractors look set to benefit from the strongest upwards revision to marketing budgets since the third quarter of 2007. The Institute of Practitioners in Advertising (IPA) Bellwether Report for the second quarter (Q2) of 2013 confirms that the internet is the key engine of growth.
“Companies are beginning to shake off the cloak of recession and are becoming more confident in the economy,” explains IPA director general Paul Bainsfair. “This bodes extremely well for continued growth in marketing spend for the rest of 2013.”
Markit chief economist and Bellwether report author Chris Williamson agrees: “Marketing spend looks set to rise in 2013 for the first time in six years as companies finally perceive a brightening business outlook at home and abroad.”
Sharp budget increases were seen in internet-related budgets, including online search and SEO, which suggests the benefits of increased spend will spill over into the IT contracting sector. Public relations (PR), sales promotion and main media advertising all experienced upwards revisions to budgets.
Surge in new contracts likely as CFOs turn on the investment taps
A surge is new contracts is likely during the rest of 2013 as stalled, postponed and new projects get underway within the UK’s contractor clients. Deloitte’s latest Chief Financial Office (CFO) survey shows the purse-string holders of contracting’s biggest clients are “shifting towards expansionary strategies and [are] more willing than ever to take on risk”.
“Business optimism has been improving for some time, but our latest survey shows that CFOs are translating this confidence into action,” says Deloitte chief economist Ian Stewart. “The recession-era focus on cost-cutting and debt reduction is easing.”
In practical terms, contractors should see a stream of new assignments as new projects begin. Projects that have been postponed and stalled due to uncertainty and poor business optimism may be resuscitated, so contractors may wish to step up their efforts to ask client contacts for contract leads.