Hiring activity across the UK continued to be dampened by a
weak economic outlook and reduced confidence among businesses, according to the
latest KPMG and REC, UK Report on Jobs
survey, compiled by S&P Global.
Permanent placements contracted at the quickest rate for just
over three years, while temp billings growth weakened notably from June.
The overall availability of staff meanwhile rose at a
substantial pace amid the slowdown in recruitment and reports of redundancies.
Notably, the latest upturn in total labour supply was the
steepest recorded since October 2009 when excluding the pandemic period. While
there were signs of pay pressures moderating again in July, permanent salaries
continued to rise at a sharp pace overall. Total vacancy growth meanwhile
slowed further, hitting a 29-month low in July.
The report is compiled by S&P Global from responses to
questionnaires sent to a panel of around 400 UK recruitment and employment
consultancies.
A weaker economic climate and reduced market confidence weighed
on recruitment activity during July, according to the latest survey data.
Permanent staff appointments declined at the steepest pace for just over
three years, as concerns over the outlook made clients hesitant to commit to
new staff. Concurrently, growth in temp billings edged down to a fractional
pace that was the slowest recorded since last October.
The latest survey showed that faster increases in the supply
of both temporary and permanent workers drove the sharpest upturn in overall
labour supply since December 2020. There were frequent reports that
redundancies and hiring freezes had underpinned the latest improvement in staff
availability.
Competition for skilled candidates and the increased cost of
living continued to place upward pressure on rates of starting pay during July.
Salaries for newly-placed permanent workers rose sharply, despite the rate of
inflation slipping to the lowest since April 2021. Temp pay meanwhile increased
at the softest pace in 29 months, albeit solidly overall.
Growth of demand for staff continued to moderate at the start
of the third quarter. Notably, total vacancies increased at the slowest pace in
29 months, and one that was well below the series trend. The latest upturn in
demand for permanent workers was the weakest seen over the current period of
recovery that began in March 2021. Concurrently, the rate of short-term vacancy
growth was among the slowest recorded over the past three years.
All four monitored English regions posted a decline in
permanent placements, led by London.
Divergent trends were seen for temp billings, which rose in
the Midlands and London, but fell in the North and South of England.
The latest survey highlighted slightly stronger increases in
demand for staff in the private sector, but rates of vacancy growth cooled in
the public sector. The strongest overall upturn in demand was signalled for
temporary workers in the private sector. Meanwhile, the weakest increase in
vacancies was seen for short-term roles in the public sector, which rose only
marginally.
Demand for permanent workers increased across the majority of
monitored sectors during July. Blue Collar topped the rankings, closely
followed by Hotel & Catering. However, demand for permanent staff in the IT
& Computing and Secretarial/Clerical sectors weakened.
Hotel & Catering saw by far the steepest upturn in demand
for temp workers of all ten categories in July. Strong rates of vacancy growth
were also noted for Engineering and Blue Collar personnel. The Construction and
Secretarial/Clerical sectors saw modest drops in demand.
Commenting on the latest survey results, Claire Warnes,
Partner, Skills and Productivity at KPMG UK, said: “The latest survey results reflect the current Summer weather – damp,
but with some possible bright skies on the horizon.
“Recruiters told us that
their clients aren’t yet confident enough in the economic outlook to commit to
permanent hires, leading to the steepest pace of decline in placements since
June 2020. Conversely, the growth in billings for temporary workers weakened
last month as job hunters hold out for permanent roles.
“Businesses are also still
freezing hiring, with some redundancies, which led to the sharpest upturn in
labour supply since December 2020. This is good news for recruiters who have an
even larger pool of candidates to place, but with the number of vacancies
available increasing at the slowest pace for nearly two and a half years,
supply and demand are once again off balance.
“For job seekers, the
ongoing competition for skilled workers and cost of living pressures are
keeping starting salaries high, making it an attractive time to move roles,
though they may be cautious about doing so.
“To rebalance the labour
market and aid economic recovery, more focus on reversing the deepening skills
gap would be a step in the right direction.”
Neil Carberry, REC Chief Executive, said: “The jobs market overall remains fairly robust, with
vacancies and pay still rising and unemployment low but there is a sense in
today’s report that the economy will need some growth soon to sustain this
positive picture. Permanent hiring has been slowing all year. To some extent
this is normalisation as the post-pandemic boom abates – but it is also driven
by uncertainty. This is seen in the scale of companies reshaping themselves
while hiring in other areas – recruiters report that the quickest rise in
labour supply since the pandemic has been driven by an increase in
redundancies. But it is also obvious in the way firms are relying on temporary
labour to keep things going in uncertain times. Temping keeps people in work
when firms are uncertain about the future path of the economy – it is a huge UK
success story.
“Hiring overall is still
at a good level, and some sectors remain under pressure from significant labour
shortages, including hospitality and construction – so there is opportunity out
there for job seekers. But today’s report emphasises again that sustained
positivity in our labour market rests on economic growth and investment in the
UK. A proper industrial strategy that tackles the big issues we face and which
fully encompasses workforce thinking around skills, transport, access to work
and immigration is long overdue.”
