Permanent staff appointments decline at quickest rate for over three years

Filed under Press release

Friday, 06 September 2019


Key findings 
  • Hiring activity wanes due to heightened uncertainty 
  • Demand for staff increases at slowest rate since January 2012
  • Pay pressures soften

 

Summary

 

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.

Comments

 

Commenting on the latest survey results, Neil Carberry, REC Chief Executive, said: 

 

“Today’s figures are a sobering reminder to politicians of all parties that national prosperity relies on businesses creating jobs and growing careers. Britain’s record on jobs is world-leading. It’s a key part of our economic success, with recruiters at the forefront of it. And there are still great opportunities out there for those looking for a new job and a boost in earnings.

 

“But all this rests on business confidence – the confidence to invest, to hire someone, to try something new – and it’s clear that things are getting harder. Permanent placements have now dropped for six months in a row and vacancy growth is slowing. While we continue to benefit from the flexibility of our jobs market as demand for temps holds steady, today’s survey emphasises the real world impacts of the political and economic uncertainty businesses are facing. 

 

“The first priority should be avoiding a damaging no-deal Brexit and giving some stability back to British businesses, so they can drive the prosperity of the whole country.”

 

James Stewart, Vice Chair at KPMG, said: 

 

“Brexit uncertainty continues to take its toll on the jobs market, evident by the quickest drop in permanent placements in over three years as employers delay hiring staff.

 

“Given the current climate, it’s not a surprise but is still a concern to see that the demand for staff increased at the slowest rate since 2012 – and that people are reluctant to seek new roles. On the plus side however, the latest decline in staff supply was the least marked for over two and a half years amid greater competition, softening the pressures on pay. 

 

“Looking ahead and with investment also contracting, businesses desperately need clarity on Brexit outcomes in order to re-build confidence in the jobs market and be able to make more informed decisions on their long-term hiring plans.”

 

ENDS 


Contact the REC Press Office on 0207 009 2129/2192 or pressoffice@rec.uk.com. An ISDN line is available for interviews on 0207 021 0584.

Click here to view all REC press releases.

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