2013.06.1004:40:29UTC+00U.K. improving, but firms remain careful

Further indication that the U.K.'s economic re establishment is taking hold arise Monday as a round of surveys reported an increase in jobs placements, and increasing output and confidence in the manufacturing sector.

The U.K.'s private sector continues to be careful, however, with businesses limiting spending until they see further hard evidence of the gradual development that began this year.

The U.K. economy grew a better than expected 0.3% on the quarter in the first three months of the year and the latest round of data and surveys suggest the recovery is progressing. There are concerns over domestic spending, however, with record low wage growth being outpaced by inflation, which means the continued expansion of the U.K.'s exports is crucial.

The Report of Jobs compiled by Markit for the Recruitment and Employment Confederation and KPMG showed that companies are increasingly willing to take on more staff, with the number of permanent and temporary job placements made by recruitment companies rose in May.

The number of new available positions also grew, albeit at a slower pace than in April, but wages for permanent positions grew at the slowest rate since January.

"The latest figures certainly give the strongest indication for some time that the jobs market is on an upward trajectory," said Bernard Brown, partner and head of business services at KPMG. "The pay-off seems to be a slowdown in salary growth."

The pickup in employment is in part due to a strong performance by the U.K.'s manufacturing sector.

According to the latest quarterly manufacturing survey from manufacturers' organization EEF and consultancy BDO, output grew at the fastest pace in a year in the second quarter.

However, while output and export growth have picked up over the past three months, companies continue to monitor costs and spending plans closely with investment plans growing at the slowest pace in a year.

And expectations for exports over the next three months were also weaker in the second quarter, although whether that is due to the recession in the eurozone or difficulties cultivating new business channels in emerging markets is unclear, the survey showed.

"Positive manufacturing data has been somewhat easier to find in recent months and our latest survey provides further confidence that the sector's prospects are improving," said Lee Hopley, chief economist for EEF.

"However the relative weakness in export orders and the softening in investment intentions suggest that confidence may still need to be tempered for now."

The British Chambers of Commerce, meanwhile, said in a separate survey more needs to be done to help firms who export their goods. The lobby group's latest survey shows the number of its members who are choosing to export their goods has risen, but more support and knowledge of the new markets they are entering would bolster their efforts.

"To really secure Britain's future as a leading global exporter, we need to do all we can to encourage companies to take advantage of new markets," said the BCC's director general John Longworth.