Scots job market surge faces threat

SCOTLAND'S jobs market continued to expand last month amid strong demand for computing and IT staff but experts today warned that eurozone fears are likely to hamper growth over the coming months.

The Bank of Scotland's monthly report on jobs shows that the labour market expanded for the ninth consecutive month in July although the rate of growth is slowing as concerns over the economy take hold.

There was a strong increase in demand for both permanent and temporary staff, with computing and IT topping the bill in both categories. There was also a robust increase in the number of permanent vacancies for engineering and construction workers, plus those specialising in nursing, medical and care.

However, even though the bank's "labour market barometer" remained firmly in growth territory, July's reading was the lowest for four months.

The index hit 55 last month, five points above the 50 mark that divides growth and contraction, but this was down from 55.2 in June and well below April's high of 56.6.

Donald MacRae, the bank's chief economist, also warned that progress would difficult in the coming months as Scotland's corporates keep an anxious eye on the unresolved crisis in the eurozone.

He said: "The Scottish labour market showed a further improvement in July, with both permanent and temporary staff appointments increasing strongly. The rate of wage inflation remained solid, but eased since the previous month.

"The number of both long and short-term job vacancies increased markedly in July, with the rate of vacancy growth rising to a three-month high. However, it will be difficult to maintain improvement, given the concerns over sovereign debt in the eurozone and slowing growth in the US."

July also marked the fourth consecutive month that expansion in the Scottish labour market outpaced that of the UK as a whole, with growth on an equivalent index for the UK hitting just 51.9 compared to Scotland's reading of 55.Of the main Scottish cities, Aberdeen, with its resurgent oil and gas industry, recorded the fastest rates of increase in staff placements, for permanent and temporary staff.

Recruitment agencies in Dundee reported the greatest skills shortages while Edinburgh saw the fastest inflation of wages.

Although the relatively upbeat survey will cheer policymakers, who were recently confronted by the reality that the Scottish economy expanded by just 0.1 per cent in the first quarter of 2011, experts warn that the storm clouds are gathering as the eurozone casts a long shadow over confidence in this country.According to a survey from BDO today, confidence across all industries has declined this month as the outlook appears increasingly uncertain.

Neil Craig, office managing partner at BDO in Scotland, commented: "As our data has suggested for some time, the UK's economic recovery continues to falter. The rapid decline of the manufacturing sector, championed as the key to a rebalancing of the UK economy, is alarming. And the services sector is showing little sign of picking up the slack."