Permanent staff appointments decline at quickest rate for over three years

The latest KPMG and REC, UK Report on Jobs indicated that labour market conditions softened in August. Permanent placements fell at the quickest rate for over three years as many employers chose to postpone staff hiring amid heightened political and economy uncertainty. Temp billings growth meanwhile remained stuck close to a 75-month low.

Total demand for staff rose at the weakest pace since the start of 2012, with both permanent and temporary vacancies rising at softer rates. An uncertain outlook also weighed on candidate numbers, as many people were reluctant to seek new roles in the current climate. However, the latest reduction in staff supply was the least marked for over two-and-a-half years. Starting pay for permanent and short-term workers consequently rose at softer rates.

The report is compiled by IHS Markit from responses to questionnaires sent to a panel of around 400 UK recruitment and employment consultancies.

Solid drop in permanent placements

Recruitment consultancies signalled that the number of people placed into permanent job roles dropped for the sixth month running in August, as many firms delayed hiring decisions due to Brexit-related uncertainty. At the same time, temp billings continued to rise only marginally.

Vacancies increase at slowest pace since 2012 

August data signalled the slowest increase in total job vacancies since January 2012. Growth of demand eased for both permanent and temporary staff, with the former expanding at the slowest rate for seven years and the latter at the softest pace for a decade.

Starting pay inflation softens

Starting salaries for permanent workers continued to rise in August amid reports of greater competition for staff. Though sharp, the rate of inflation was the slowest recorded since December 2016. Meanwhile, temp pay growth edged down to a five-month low.

Candidate supply contracts further in August

Although overall candidate availability deteriorated at the slowest pace for 32 months in August, the reduction remained much quicker than the historical trend. The fall was led by a further steep decline in permanent candidate numbers, as temp labour supply fell modestly.

Regional and Sector Variations

The Midlands, North and South of England all saw marked declines in permanent placements. Notably, it was the first reduction seen in the North of England for six months. London bucked the overall trend and saw a slight rise in permanent staff appointments in August. Temp billings growth was relatively muted in the North and South of England, while billings broadly stabilised in the Midlands. In contrast, London recorded a renewed fall, albeit only marginal.

Softer increases in vacancies were seen in the private sector, while public sector staff demand remained lacklustre. Private sector permanent vacancies rose at the softest rate since January 2012, while growth of demand for temp staff eased to a 79-month low. In the public sector, permanent staff vacancies fell again, and temp staff demand rose only modestly.

IT & Computing remained at the top of the league table in terms of permanent staff demand during August, followed by Hotel & Catering. Construction and Retail sector vacancies meanwhile contracted again.

Demand for temporary staff increased in half of the ten monitored sectors, led by Hotel & Catering and Nursing/Medical/Care. Of the five sectors which recorded lower vacancies, the steepest decline was seen in Retail.

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