By Claire West

Following the latest unemployment figures issued last week, the Recruitment & Employment Confederations (REC’s) August JobsOutlook confirms an increased polarisation between the public and private sectors in terms of employment prospects.

The survey’s Jobs Barometer - which tracks employer confidence - fell three points in July following five successive months of improvement.

JobsOutlook, the only monthly monitor of employers’ recruiting intentions, shows that while overall business confidence has stabilised over the last year, this has not yet converted into short-term hiring with economic uncertainty leading to the slight dip in employer confidence.

The results also shed new light into an increasingly complex labour market in which employers remain determined to maintain control over workforce costs. As a result, the number of employers reporting redundancies edged up in July and the boost in hiring anticipated for the autumn seems less likely.

Employers’ intent to take on temporary and permanent hires in the next three months remains stable but is relatively subdued compared to expectations at the beginning of the year. The longer term prospects for jobs growth however are more encouraging.

Overall, 31 per cent of employers interviewed expected to increase their use of temporary workers in the next 12 months and 29 per cent predicted their permanent workforce would grow over the same period.

Commenting on the JobsOutlook findings, Roger Tweedy, the REC's Director of Research, said:

“The results show a growing public sector ‘drag’ effect on overall labour market optimism. We know that certain sectors within the private sector are currently buoyant and expect growth to continue throughout 2010 and it is likely that this polarising effect will continue for a while as different parts of the economy emerge from the recession at different rates.

“At a national level, continued uncertainty about the strength of the economic recovery makes it difficult for many employers to be more positive about their immediate hiring plans. The encouraging news is that medium term optimism remains relatively strong and this is likely to be a good indicator of underlying sentiment.”

He added:

“Recent surveys have suggested that large numbers of workers are now seriously looking to change jobs for the first time in two years in spite of low levels of overall consumer confidence. This activity could well improve trading conditions for many recruiters as the jobless recovery continues