Encouraging signs?

After months of unrelieved gloom, it's good to be able to report that the economic crisis might be showing one or two slight signs of easing.  But while things may be starting to look a little more hopeful on the business front, there's still precious little good news on jobs, with the recent cull apparently continuing unabated.

In the service sector, the pace of decline has slowed to its lowest rate since last September.  The latest Chartered Institute of Purchasing and Supply/Markit headline business activity index hit a six-month high in March, up from 43.2 in February to 45.5 in March - its fourth consecutive monthly improvement.  The CBI has reported that credit conditions appear to be easing for businesses, and confidence levels among UK service providers have now reached their highest level since last August.

According to Paul Smith, a senior economist at Markit, "The latest upturn in the activity index and another improvement in business confidence provide further evidence that the severe contractions in services output at the end of last year may now be behind us."  For Colin Ellis, European economist at Daiwa Securities, "This is yet another glimmer of hope that there may be some light at the end of the long and twisting tunnel the UK economy has ended up in."

And although UK manufacturing output has fallen consistently over the past year, there are signs that the rate of decline may be easing in this sector too.

But with employment traditionally regarded as a ‘lagging indicator' of economic performance, any positive signs have as yet had little impact on the job market, where the cull continuous to be fast and furious.

There's the odd bright spot, of course.  For example, a survey of the IT sector by IT recruiter ReThink Recruitment has found that the proportion of IT directors who plan to take on IT staff (34%) comfortably exceeds those planning to cut headcount (20%).  And the latest monthly Report on Jobs (from the Recruitment and Employment Federation and KPMG) reveals that the decline in permanent job vacancies has fallen to its lowest rate for six months, leading REC chief executive Karen Green to suggest that the pace of deterioration in the jobs market may be easing, which apparently "rings true with what recruitment businesses are seeing on the ground."

But elsewhere the picture remains pretty bleak, not least in the financial services sector.  A survey from the CBI and PricewaterhouseCoopers reports that jobs in financial services are currently being cut at the fastest rate since 1993, with a further 15,000 expected to go over the next three months to counter record falls in income and sharp declines in profitability.  Even Britain's ‘stronger' financial companies are still reducing headcount.

Looking at the wider UK picture, the British Chambers of Commerce predict that unemployment will peak at 3.2m next year - a level that hasn't been reached since the 1980s.

It's not just a UK problem, of course.  In Ireland - a boom economy not so long ago - unemployment has reached a new record of 372,800, which represents 11% of the working population.  And in the US, the unemployment rate has reached 8.5% - a 26-year high - with over 5m jobs lost since the onset of the recession.  Christina Romer, head of the White House council of economic advisers, said jobs growth would not restart till after the economy started growing again, which she expected to see at the end of this year.

So while there's still obviously a long way to go, it would be nice to believe that there is indeed a faint but distinct glimmer of light now showing at the end of the tunnel.