Scottish labour market conditions improved at the fastest rate for eight months in March, according to a survey that will boost hopes the economy will return to moderate growth this year.
Research for Bank of Scotland found evidence of a continued recovery in the key jobs market last month when demand for staff increased in a range of sectors.
The Bank of Scotland Labour Market barometer rose for the fourth month running in March, to a reading of 54.6, well above the 50 mark that separates expansion from contraction. The barometer read 52.4 in February.
The reading was the highest since the score of 55 that was recorded in July last year, before the economy was rocked by the problems in the eurozone and weak consumer confidence.
Professor Donald MacRae, chief economist at Bank of Scotland, said there had been a solid increase in demand for permanent staff with the number of placements increasing in all eight sectors monitored by the report.
Temporary postings rose at the fastest rate for seven months.
"This provides further evidence of an economy beginning to reverse the slowdown experienced at the end of last year and raises hopes of a return to moderate growth in 2012," said Prof MacRae.
The sectors covered were IT and Computing, Executive and Professional, Engineering and Construction, Accounts and Financial, Secretarial and Clerical, Nursing/Medical/Care, Hotel and Catering, and Blue Collar.
The barometer findings come soon after the results of two closely watched surveys showed that the Scottish economy was accelerating. These helped to dispel fears the country could suffer a double-dip recession.
Last week the results of the latest quarterly survey by Scottish Chambers of Commerce showed business activity picked up in the three months to March with firms in manufacturing and tourism leading the way.
Research for the latest PMI from Bank of Scotland showed the pace of output growth picked up strongly in March.
However, a prominent forecaster warns today that the UK has only narrowly avoided a double-dip recession and will struggle for the rest of the year unless businesses stop hoarding cash and start investing.
The Ernst & Young ITEM Club predicts growth in UK gross domestic product will be a "dismal" 0.4% this year, half the 0.8% estimated by the tax and spending watchdog, the Office for Budget Responsibility, before rising to 1.5% in 2013 and 2.6% in 2014.
Peter Spencer, chief economic adviser to the Ernst & Young ITEM Club, said the UK will not prosper again until businesses invest stockpiled cash. He said: "Business investment has picked up nicely in the US but UK companies remain extremely risk averse, which is sapping strength from the economy."
Based on a survey of a panel of 105 recruitment consultancies in Scotland by Markit, the Labour Market Barometer includes evidence of a broad-based improvement.
Bank of Scotland said the number of vacancies for permanent staff increased "markedly" during March.
Demand increased in all eight sub-sectors monitored for the barometer.
The rate of growth in the executive and professional sub-sector was the strongest in 21 months.
Demand for engineering and construction staff rose at the fastest rate for 11 months. The lowest rise was in the blue-collar sector.
Vacancies for temporary staff rose at the fastest rate in four months. Demand increased in all sectors except blue collar and hotel and catering. The average salaries awarded to permanent staff and the hourly rates paid to temps increased during the month.
The findings suggest the labour market is in better shape in Scotland than in the rest of the UK. The barometer reading for the UK edged up to 51.5 in March, from 50.5 in February.
But the key question will be whether the private sector in Scotland can create jobs fast enough to compensate for the big fall in public sector employment which is expected to result from the Coalition Government's efforts to curb spending.
Some economists believe Scotland will be hit harder than other parts of the UK in this process.
Bank of Scotland noted the number of people claiming Jobseekers' Allowance in Scotland increased by 600 in February to 142,800, up 5400 on the same month in 2011. The unemployment rate in Scotland was unchanged at 5.3% compared with 5% in the UK.
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