The reason for this positive outlook is that UK technology sector companies are very optimistic about business activity and recruitment.
According to the latest KPMG/Markit Tech Monitor UK Report, employment trends in the tech sector outstripping those seen across the UK private sector as a whole.
The KPMG/Markit report found that almost half of UK-based technology companies surveyed expect to employ additional staff over the next 12 months.
Recruitment by UK technology companies is close to its strongest for three years, and faster than the UK private sector average, according to Markit’s highly regarded Purchasing Managers’ Index (PMI).
The main reason for the boon in business confidence seems to be the improved domestic economic outlook, with increased investment.
“All the data in this report point to a UK tech sector that is in rude health, and increasingly optimistic in its outlook on business activity and recruitment plans,” said Tudor Aw, head of technology at KPMG.
Business growth in the technology sector in the first quarter of 2014 was only marginally slower than the ten-year high reached at the end of 2013.
This was helped by a rise in new work and the lowest rate of cost inflation for over four years.
According to Aw, the strength of the technology sector is having an impact on the UK’s economic performance as a whole and the burgeoning recovery.
“It is time the sector received the recognition and support it deserves,” said Aw.
According to Tim Moore, senior economist at Markit, the UK’s technology companies punch above their weight in terms of contribution to UK GDP growth.
“The health of the tech sector and its ability to deliver productivity gains across the wider economy are key factors that will determine how quickly the UK economy can recover without hitting growth constraints,” said Moore.
There is inevitably a big focus on the UK’s buzzing start-up sector, but Aw says “we must not neglect the wider tech sector.”
“We should ensure that the sector as a whole gets the profile and support that it needs such as focused government policies that help develop and encourage education in STEM (science, technology engineering and mathematics) subjects, and ease access to tech talent on a global basis,” said Aw.
The rising confidence means that companies are creating new career opportunities for scientists and engineers.
“The latest survey suggests that the tech sector again outperformed the UK economy in terms of job creation, reflecting widespread optimism that workloads will continue to expand over the months ahead,” said Moore.
And the indications are that this positive trend in the technology sector will continue. “A buoyant mood among tech companies about future job hiring intentions bodes well for growth in the year ahead and is a further signal that the UK economy is set to continue its upward ascent over the course of 2014,” said Moore.
The strong performance from the tech sector in the first three months of the year has prompted substantial upward revisions to the 2014 growth outlook.
“Tech companies stand to benefit from two key domestic economic tailwinds this year, which are rising business investment as confidence in the recovery takes hold and improving household spending power as wages finally start to climb more quickly than consumer prices,” said Moore.
The headline UK Tech PMI index, measuring business activity in 150 technology companies, posted 60.0 in March, well above the crucial 50.0 no-change threshold and close to the ten-year high of 60.9 recorded at the end of 2013. This indicated that business activity growth in the tech sector outstripped that of the UK economy as a whole.
Latest survey data show that technology sector firms also benefited from a combination of higher selling prices, weakening cost inflation and rising new business volumes during the first quarter of 2014.
KPMG’s Aw says there is one more piece in the jig-saw missing. “With the increase in IPO activity, I would like to see the strong performance of UK tech companies translate to a mainstream technology company floating in London to help boost the sector and cement the UK’s position on the map of global tech hotspots.”