Business

Essay by PaperNerd ContributorUniversity, Master's October 2001

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THE economic downturn really is already here, and getting worse. Government statistics last week showing a further slowing in the second quarter were greeted by industry with a rueful nod.

Sudhir Junankar, of the CBI, said the figures confirmed a two-speed economy, with manufacturing suffering but the service sector being much more resilient. Ian Fletcher, of the British Chambers of Commerce, however, said: "The weakness in manufacturing is now feeding through into the wider economy." This confirms other figures on economic activity and is supported by the latest Telegraph Recruitment Confidence Index, which shows that manufacturers are not just slowing but actually in decline.

Service companies are now making plans to batten down the hatches for the rougher period ahead. Although the expectation is for some small continuing overall growth in recruitment over the next six months, that increase has now slowed for the second quarter running.

With managers concerned about the level of demand for products, there are signs the growth will disappear soon, and overall there may be a decline in employment.

The full impact of the economic problems has not yet been felt across the board, however, and there is a growing nervousness at the continuing weakness in client markets. Many firms are preparing for further problems ahead.

As a result, there has been a strong fall since the start of the year in the balance of organisations expecting to increase their workforce and the Recruitment Confidence Index has reversed the growth experienced in the second half of last year.

If the trend of the past six months continues, the demand for senior management staff will go into reverse from this autumn, falling from the slow growth it is showing at the moment to register a decline. Extrapolating the latest figures would show nil growth for all staff after about another six to nine months.



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