While Singapore's hiring outlook dimmed slightly in the first quarter, it remains buoyant on the back of positive economic developments in China.

A quarterly report of employment trends by recruitment firm Hudson found that two in five employers (43.2 per cent) planned to boost headcount in Q2, down 1.4 percentage points from Q1.

Those intending to keep headcount levels steady rose 5.4 percentage points to 51.5 per cent, reflecting high labour demand and a tight talent market.

Business and consumer confidence improved from a year earlier, and is expected to remain stable throughout 2013, the report said.

Hudson's figures, released yesterday, were based on a poll of 324 employers in Singapore.

The report comes more than two weeks after human resource consultancy Manpower's employment outlook report predicted that employment prospects would be better in Q2 than the previous quarter, with nearly a quarter of local employers expecting to hire in the coming quarter even as 7 per cent said that they would downsize.

Said Andrew Tomich, executive general manager at Hudson Singapore: "Whilst the global economy looks set to stay sluggish, China's economy is beginning to regain confidence, having positive flow-on effects for the Singapore economy and job market."

In descending order, hiring prospects were brightest in manufacturing and industrial (58.5 per cent), information technology and telecommunication (47.1 per cent) and banking and financial services (33 per cent). Manufacturing and industrial's boost came from a recovery in the global and Chinese manufacturing market.

"At a government level, Singapore is serious about developing its resident workforce and most employers are now adopting Singaporean-first policies when recruiting, and the quota for foreign workers is set to decline," said Mr Tomich. "When it comes to hiring, employers are thinking local, local, local, however increasing restrictions on the available workforce are creating a shortage of suitable candidates in an already tight market."

The report said businesses here recognise the need to invest in retaining talent, with more than three-quarters of employers putting in place programmes to identify promising staff and develop them.

"Smart employers know the market will regain strength again at some point, and this will result in greater demand and competition for talent assets," said Mr Tomich. "Being able to hold onto talent, and accelerate their growth will enable them to ride the wave of growth as and when it arrives."

Given the talent shortages faced by local firms, it is imperative that they recast their approach to talent management, he said.