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Hiring Activity Growth Slows Again in July Amid Increased Economic Uncertainty
Hiring activity growth slows again in July amid increased economic uncertainty
The main findings for are:
Softer expansion in overall recruitment activity
Latest survey data pointed to slower increases in both permanent staff appointments and temp billings at the start of the third quarter. In each case, the rate of expansion softened to the weakest in 17 months, as a number of firms commented that greater uncertainty towards the outlook and rising costs had led some clients to be more cautious around hiring decisions. The murkier outlook also contributed to the fact that temp billings rose more strongly than permanent staff appointments.
Vacancy growth dips to 16-month low
Recruitment consultancies signalled a further sharp increase in demand for staff during July. However, the rate of vacancy growth eased for the third month in a row and was the slowest recorded since March 2021. Underlying data pointed to softer increases in demand for both permanent and temporary staff, with the former seeing the more marked slowdown.
Availability of candidates falls at softer, but still sharp rate
As has been the case since March 2021, the supply of workers across the UK fell during July. Though rapid and much quicker than the long-run average, the rate of reduction was the slowest seen in 15 months. Downturns in the availability of both permanent and temporary workers eased compared to June. Nonetheless, there were still widespread reports of skills shortages, fewer foreign workers and a greater hesitancy to seek out new roles due to increased economic uncertainty and concerns over job security.
Starting pay inflation eases only slightly
Amid the rising cost of living and greater competition for scarce staff, rates of starting pay continued to rise sharply for both permanent and short-term workers in July. The latest increase in starting salaries was the least marked for 11 months, however, while temp wage inflation softest to the slowest for just over a year.
“The jobs market remains solid. Demand for staff continues to rise, as it has done since early 2021, rising in every sector. Starting salaries are still growing too, making this a good time for jobseekers to be looking for their next role. “However, growth in permanent hiring has softened in recent months. We’ve seen that rising fuel and energy prices, inflation and labour shortages are impacting employer confidence. Labour and skills shortages are also restricting opportunities for both the private and public sector to meet consumer demand. Our latest report shows that these constraints could cost the UK economy up to £39 billion a year if we don’t work to fix these issues now. “So it’s vital that both government and businesses start putting their people and their staffing strategies first. We know what needs to be done: there should be improved provision of skills training, increased employment from under-represented groups, and we need good transport, childcare and immigration systems.”
Commenting on the latest survey results, Claire Warnes, Head of Education, Skills and Productivity at KPMG UK, said:
“The trend of uncertainty in the UK jobs market of the last few months continues, as overall hiring activity saw another slowdown in July. Given the challenging economic outlook, employers are rightly hesitant about their hiring plans. But to compound this, a lack of suitable candidates and an overall skills shortage in most sectors are keeping starting salaries high. “As the cost-of-living crisis continues to bite – alongside rising inflation – workers may well choose to stay where they are rather than risk job security by moving now. So, a focus on upskilling existing workers and attracting talent remains absolutely essential for UK business to play its part in driving forward the economy.”
The Report on Jobs is unique in providing the most comprehensive guide to the UK labour market, drawing on original survey data provided by recruitment consultancies and employers to provide the first indication each month of labour market trends.
Mosaic Search and Selection contribute market data to this Report on Jobs which is a monthly publication produced by Markit and sponsored by the Recruitment and Employment Confederation and KPMG LLP. The full copy of this report is available from Markit.
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