The latest KPMG and REC, UK Report on Jobs survey has revealed a sustained, but softer reduction in permanent staff appointments across the South of England in October.
Cautious hiring policies amid ongoing economic uncertainty were linked by recruiters to the latest fall. Notably, a preference for more flexible staff supported a fresh rise in temporary staff billings, albeit marginal.
The subdued economic outlook also weighed on vacancies in the South of England, with both permanent and temporary job opportunities falling in October. Recruiters also noted sharp increases in candidate numbers amid reports of redundancies. At the same time, pay pressures cooled, with starting salaries and temp wages increasing at below-average rates.
The KPMG and REC, UK Report on Jobs, South of England is compiled by S&P Global from responses to questionnaires sent to around 150 recruitment and employment consultancies in the South of England.
Downturn in permanent placements eases notably
The seasonally adjusted Permanent Placements Index remained below the neutral 50.0 level in October, to signal a decline in permanent staff appointments across the South of England for the seventh straight month. Panel members often mentioned that employers were reluctant to hire permanent staff or had put recruitment on hold due to the muted economic climate. That said, the decrease was the weakest seen over the aforementioned period (seven consecutive months).
A softer reduction in permanent placements was also seen at the national level, albeit one that was sharper than that seen in the South of England. London saw by far the steepest reduction in placements at the start of the fourth quarter.
Billings received from the employment of short-term staff in the South of England increased during October, thereby ending three months of decline. Although marginal and weaker than the series average, the rate of growth was similar to that seen across the UK as a whole. According to anecdotal evidence, efforts to quickly fill vacancies and a preference for temp staff over permanent hires among employers supported the renewed rise in billings.
On a regional basis, the North of England was the only monitored English area to record lower temp billings in October.
Permanent staff vacancies across the South of England fell for the third straight month in October. Although the rate of contraction softened to a modest pace, it remained steeper than that seen at the national level.
Temporary work opportunities in the South of England meanwhile fell into decline for the first time in seven months. Though marginal, the reduction contrasted with improvements in demand for short-term staff across the three other monitored English areas.
Steeper increase in permanent candidate numbers
Recruiters signalled an eighth consecutive monthly rise in the availability of candidates to fill permanent roles in the South of England during October. Furthermore, the rate of growth quickened notably in the month and was the second-sharpest since December 2020. Company layoffs were widely linked to the latest rise in candidate numbers. Notably, permanent labour supply expanded at a similarly rapid pace across the UK as a whole.
Where higher temporary candidate availability was reported, panellists generally linked this to redundancies and fewer client projects (job opportunities).
Softest rise in permanent starting pay since March 2021
The rate of starting salary inflation across the South of England moderated for the third successive month in October. Albeit solid, the rate of pay growth was the weakest since March 2021 and the softest of all four monitored English regions. The quickest increase in permanent starters’ pay was meanwhile seen in London.
Higher starting salaries were widely attributed to competition for suitably skilled workers. However, there were also reports that cost pressures at some clients had limited the latest upturn in pay, particularly after a period of strong inflation.
After rising at the softest pace in just over two-and-a-half years in October, temp wage inflation picked up in October. The solid rise in hourly wage rates was the most pronounced in three months. That said, the respective seasonally adjusted index remained below the long-run average and was softer than the UK-wide trend.
While a lack of suitable candidates continued to place upward pressure on wages, some recruiters noted that tighter client budgets had limited overall growth.
All four monitored English regions registered higher temp pay in October, led by the North of England.
Neil Carberry, Chief Executive of the REC, said, “In many ways, the labour market is marking time waiting for the brakes to be taken off growth by the Bank of England. While permanent hiring is now declining more softly, temporary hiring continues to pick up the slack – with billings gently growing in October on the back of rising wages. While the rate of pay growth has now returned to more normal parameters, it is still strong, especially in sectors where staff remain in short supply in the South of England such as blue-collar, accounting/financial and hospitality. Company layoffs were widely linked to the latest rise in candidate numbers. Looking to the Autumn Statement, businesses and Government need to be aware that the return of growth will reveal shortages more widely – action on skills, welfare-to-work programmes and immigration reform will be needed to prevent a return to growth being squandered.”
Neil added, “Healthcare providers are ramping up their hiring ahead of the winter, but candidate supply is short. Agency medical staff are keeping wards open and getting patients treated – they need a bit more support from Government. Reforming capped on-framework agency rates so pay for temps working on-framework can rise for the first time in four years will save Government money as they will end up using far fewer emergency shifts, and it will reward a part of the NHS workforce that is too often overlooked.”
For more information on the report visit: rec.uk.com/our-view/reports-jobs