Consumer confidence dipped last month, according to the most recent Expectations and Spending indices from the Nationwide. This could have a knock on effect on umbrella company contractors as businesses rein in spending temporarily.
Chief economist at Nationwide, Robert Gardner, said household confidence is still in the doldrums and heading towards the all time lows last witnessed in the recession. Last month, consumers were hit by the Vat increase and rising fuel costs putting additional pressure on already stretched household budgets.
Small businesses in the service sector are being particularly badly hit by the recent downturn. Turnover has dropped 38% compared to 19% in medium sized firms and just 3% in the larger organisations.
It seems to be bad news all round at the moment. A new survey by the CIPD and KPMG has discovered that unemployment could rise in the next few months.
Although there is expected to be some growth in the private sector, it will not be enough to compensate for public sector redundancies. Two thirds of public sector organisations are expecting to trim their headcount in Q1 this year and the average cut is likely to be 13% of all positions.
Manufacturing and private sector services are likely to provide some job opportunities this quarter so contractors working through recruitment agencies may still be able to find roles. Public policy adviser, Gerwent Davies from CIPD, said this quarter was always going to be a time of reckoning and the modest recovery experienced last year is set to be reversed by a slight relapse.
Analysts had previously predicted a 9% unemployment rate later this year and these latest findings support that prediction.
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