Report on Jobs: Downturn in hiring activity eases in April

Candidate supply continues to rise rapidly

Recruitment consultancies signalled a further substantial increase in the number of candidates seeking work in April. Moreover, the rate of growth eased only slightly from March and was therefore the second-sharpest since December 2020. The supply of permanent candidates expanded at a sharper rate than that seen for temporary staff. According to panellists, the uplifts in staff supply were largely due to job losses amid company restructuring efforts and redundancies, as well as a reduction in recruitment activity.

Temp wage growth improves

Starting salary inflation was solid in April, with the rate of pay growth unchanged from March's seven-month high. However, the increase remained much slower than seen on average through the survey history (which began in October 1997). At the same time, temp wage growth improved to the fastest in 11 months with panellists highlighting the inflationary impact of recent increases in the national minimum and living wage rates.

Demand for staff continues to decline sharply

Overall demand for staff weakened in April, as has been the case in each of the past 18 months. The rate of contraction quickened slightly since March, but remained softer than seen earlier in the year. Underlying data pointed to similarly sharp falls in both permanent and temporary vacancies.

Regional and Sector Variations

The South of England registered the steepest reduction in permanent staff appointments in April while London recorded the softest decline.

Temp billings fell across all four monitored English regions for the third successive month, with the South of England seeing the most pronounced rate of decline.

Engineering was the only monitored job category to see an improvement in demand for permanent staff during April, albeit one that was modest overall. Nursing/Medical/Care, Hotel & Catering and Retail sectors meanwhile saw the steepest reductions in permanent vacancies.

April survey data indicated that demand for temporary staff fell across all ten monitored job sectors, led by Retail. Engineering saw the softest drop in short-term vacancies, despite the rate of contraction quickening slightly on the month.

Comments

Commenting on the latest survey results, Jon Holt, Group Chief Executive and UK Senior Partner KPMG, said:

“A softening in the pace of the hiring slowdown failed to bring any significant green shoots for the jobs market in April, as recruitment continued to be muted and the number of people looking for jobs increased. This is unsurprising, with businesses facing several pressures due to current global economic uncertainty and rising costs, it is unlikely to lead to a sudden turnaround in the market in the near term.

“Starting salaries increased again in April, as a new national minimum wage took effect, but the fact that the pace of growth continues to remain below the long-run average will support the Bank’s decision to decrease interest rates this month. While the inflation outlook has shown some improvement, businesses will be looking for more signs of market stability before committing to any major spending.”

Commenting, Neil Carberry, REC Chief Executive, said:

“Given the bow wave of costs firms faced in April, maintaining the gradual improvement in numbers we have seen over the past few months is on the good end of our expectations. While we are yet to see real momentum build, hopes of an improving picture in the second half of the year should be buoyed by today’s data.

"Last week’s interest rate move is well-timed, offering some relief for businesses, with pay pressures now more contained.

“The biggest single drag factor on activity right now is uncertainty. Some of that can’t be helped, but payroll tax costs and regulation design is in the Government’s gift. Businesses have welcomed positive discussions with Ministers on the Employment Rights Bill, but now it is time for real changes to address employers’ fears and boost hiring. A sensible timetable and practical changes that reduce the red tape for firms in complying with the Bill will go a long way to calming nerves about taking a chance on someone.”

Methodology

The KPMG and REC, UK Report on Jobs is compiled by S&P Global from responses to questionnaires sent to a panel of around 400 UK recruitment and employment consultancies. 

Survey responses are collected in the second half of each month and indicate the direction of change compared to the previous month. A diffusion index is calculated for each survey variable. The index is the sum of the percentage of ‘higher’ responses and half the percentage of ‘unchanged’ responses. The indices vary between 0 and 100, with a reading above 50 indicating an overall increase compared to the previous month, and below 50 an overall decrease. The indices are then seasonally adjusted.

Underlying survey data are not revised after publication, but seasonal adjustment factors may be revised from time to time as appropriate which will affect the seasonally adjusted data series.

For further information on the survey methodology, please contact economics@spglobal.com.

Full reports and historical data from the KPMG and REC, UK Report on Jobs are available by subscription. Please contact economics@spglobal.com.