Contractors ended 2010 on a high and, despite the sharp contraction in economic growth in the final quarter of 2010, the economic uncertainty continues to work in favour of contractors across most sectors: sector skills council e-skills UK predicts above-trend demand for IT contractors; and two of the UK’s heavyweight business organisations suggest contractors in the manufacturing sector have strong prospects.
In this month’s ContractorCalculator Market Report:
- Online demand for contractors across most core contracting disciplines reached an end of year high, reports December’s Monster Employment Index (MEI)
- Contractor demand growth is at a six-month high as engineering and construction contractors top the demand table, according to the Recruitment and Employment Confederation (REC)/KPMG Report on Jobs
- Sector skills council e-skills UK forecasts that 500,000 new IT positions will be created in the UK over the next decade
- emand for contractors in the manufacturing sector will be driven by strong exports in the first quarter of 2011, according to the CBI
- Contractors benefit from economic uncertainty as the British Chambers of Commerce shows that contract and temporary staff recruitment are above trend.
Core contracting disciplines achieve end of year high
Contracting ended 2010 on a high, as all major contracting disciplines achieved double-digit growth, the exceptions being engineering and construction. According to the Monster Employment Index (MEI) in December 2010, year-on-year online demand growth for key contractor sectors was as follows:
- IT 26% (2nd place)
- Marketing 23% (3rd place)
- Telecoms 17% (4th place)
- Management & consulting 16% (5th place).
IT was beaten to first place by transport, post and logistics. Engineering just failed to make double digits, with year-on-year growth achieving 9%. December 2010’s online demand for construction contractors fell by 5% from the previous month, but was up 6% on the year.
As Monster UK & Ireland spokesperson Isabelle Ratinaud explains, 2010 showed a marked improvement in the online jobs market compared with 2009, but 2011 holds some uncertainties. “Though this upward trend continues, the pace of increase has slowed in recent months, suggesting that employers are playing on the safe side and waiting to see how 2011 unfolds before they start a new wave of recruitment.”
That could work in favour of contractors able to fulfil clients’ short-term project needs while employers make up their mind about recruiting permanent employees in 2011.
Contractor demand growth sustained for seventeen successive months
Contractor demand growth has accelerated to a six-month high, and is in its seventeenth successive month of growth, reports December 2010’s Recruitment and Employment Confederation (REC)/KPMG Report on Jobs.
Engineering and construction contractors top the demand table with blue-collar manufacturing contractors in second place. The IT sector has bounced back from its slump in October 2010 to reach third place, but demand is still down compared with December 2009, when IT contractors were in second place.
REC Chief Executive Kevin Green forecasts that the next few months will be tough for the UK jobs market: “With public sector cuts, the VAT rise and slowing economic growth, we expect to see businesses being much more cautious about hiring in the short term.”
Half a million new IT positions to be created over next ten years
IT contractors are set to benefit from IT sector growth that is forecast to buck the national average and create more than 500,000 new contract and permanent positions over the next ten years. And despite the recession, demand for IT contractors has continued to increase over the last twelve months.
This is according to the business and information technology sector skills council, e-skills UK. In its latest research publication, Technology Insights 2011, e-skills predicts that IT job creation will enjoy 2.19% year-on-year growth, five times the national average of 0.45%, which equals the creation of 110,000 new contract and permanent roles each year.
As Andy Green, Chair of the e-skills UK board and Global CEO of Logica explains, the growing number of IT contractors will play a key role in enhancing the UK’s productivity and global competitiveness.
This new research from e-skills UK demonstrates how the IT & Telecoms sector is fundamental to private-sector-led economic growth in the years ahead
Andy Green, Logica
“This new research from e-skills UK demonstrates how the IT & Telecoms sector is fundamental to private-sector-led economic growth in the years ahead,” says Green. “We need to leverage the power of technology to deliver productivity and global competitiveness, and to create the high-value jobs on which the whole UK economy increasingly depends.”
Manufacturing contractor demand to be driven by exports – CBI survey
Contractors working in assignments that support the manufacturing sector will find demand for their services sustained. That’s because the manufacturing recovery shows no signs of slowing, despite a fall in the UK’s overall economic output in the final quarter of 2010. However, increasing raw material costs may adversely affect contractor rates as businesses seek to cut overheads to compensate.
The Confederation of British Industry (CBI) January Quarterly Industrial Trends Survey predicts continued strong export growth supported by modest increases in domestic demand for the first quarter of 2011, with overall output likely to exceed that of the previous quarter.
According to CBI Chief Economic Adviser Ian McCafferty, the manufacturing recovery is firmly rooted, with increased production leading to improved employment prospects. “The recovery in the manufacturing sector is firmly in place and looks set to continue,” he says. “It is also encouraging to see that employment prospects in the sector have risen for the second consecutive quarter and manufacturers’ confidence is improving.”
Contract recruitment rises above trend, partly driven by economic uncertainty
Contractors are benefiting from the economic uncertainty as firms choose to take on low risk contractors rather than permanent employees. The British Chambers of Commerce (BCC) Quarterly Economic Survey (QES) reports that contract and temporary staff recruitment is above trend, while permanent employee recruitment is below it.
In contrast to GDP data released by the Office of National Statistics this month that showed negative economic growth in the last three months of 2010, the BCC’s data suggests GDP continued to grow, driven mainly by manufacturing exports, but at a slower pace.
The QES goes on to report that manufacturing sector workforce growth continues at record levels, where services have remained static, and confidence in the sector remains high. However BCC Chief Economist David Kern warns: “A new recession is unlikely, but the dangers cannot be shrugged off.”