Companies have ramped up hiring in recent weeks while consumer confidence has started to rise, research suggests, in a boost for Rachel Reeves as the government looks for signs of economic growth.
The chancellor has received a fillip after the market research company GfK’s consumer index improved from -22 in January to -20 in February as households said they were more optimistic about their personal finances and the economic outlook.
A separate survey of employers by the Recruitment and Employment Confederation (REC) found that companies had increased hiring in January for the first time since last June.
The studies are in contrast to recent official figures and gloomy reports from business groups that showed the job market worsening.
Businesses have complained that increases in employers’ national insurance and the national minimum wage – due in April – together with planned improvements to workers’ employment rights have forced many firms and charities to consider layoffs and hiring freezes.
The GfK and REC reports reveal a lift in the mood, though analysts remain divided about how much the economy will grow amid global uncertainty and the threat from Donald Trump of trade tariffs on UK exports to the US.
The Bank of England has said that strong pay growth, even as inflation increases, will improve household spending power and put the consumer in the economic driving seat this year.
Neil Bellamy, the consumer insights director at NIQ GfK, said there was a contrast between January, when the five main measures of consumer confidence were all down, and February when they all increased.
Consumers were feeling better about their personal finances, in part because a cut to interest rates by the Bank to 4.5% this month has “brightened the mood for some people”, Bellamy said.
Since the pandemic began in early 2020, the index has risen as high as -7 in July 2021, and dropped as low as -49 in September 2022. The last time the index was positive was in 2016.
Bellamy added that the index was still low while “the majority of consumers continued to wrestle with the impact of higher prices following more than two years of high inflation”.
“Prices are still rising above the Bank of England’s target and gas and electricity bills remain a challenge for many households,” he added.
Bellamy said that “people don’t expect the economy to show any dramatic signs of improvement soon”.
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The GfK figures contrasted with a separate survey from the British Retail Consortium and Opinium this week that showed confidence among UK consumers has dropped sharply since last summer.
The REC, a lobby group for recruiters, said its survey of businesses found that the number of job postings in January was 1,516,535 – an increase of 7.2% on the previous month.
Marking the first rise in job postings since June 2024, the REC said every region in the UK benefited, with the largest increase in the East Midlands (11.7%) and the smallest in London (3.4%).
More encouraging for the government, the number of new job postings was 738,040, up 34.4% on a sluggish reading in December and better than the 27.9% increase in January 2024.
The group’s deputy chief executive, Kate Shoesmith, said that while there were “tough conversations going on in boardrooms across the country” about the extra costs from inflation and higher taxes, “today’s report suggests it is too soon for gloom about the UK economy’s prospects overall for 2025”.
“The increase in job postings is a clear sign that employers will hire when they need to. A 34.4% increase in new jobs signals a solid rebound in demand, showing that businesses remain resilient, despite both domestic and international headwinds,” she added.
