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Permanent Placement Growth Weakens to a 16-month Low in June
The main findings for June are:
Notable slowdown in permanent placement growth
Recruitment activity continued to expand across the UK during June, with temp billings rising to a greater extent than permanent placements. Notably, permanent staff appointments increased at the slowest rate for 16 months, which was blamed on a combination of candidate shortages and slower decision-making at clients amid greater uncertainty around the outlook and rising costs.
Softest increase in vacancies since March 2021
Although overall vacancies continued to rise at a historically sharp pace in June, the latest upturn was the least marked for 15 months. Softer rises in demand were signalled for both permanent and temporary workers at the end of the second quarter, with the former noting the quicker rate of expansion.
Steeper reduction in overall candidate availability
The availability of staff continued to decline at a severe pace in June. Furthermore, the pace of deterioration quickened to the sharpest for three months, with both permanent and temporary labour supply falling at faster rates. Recruitment consultancies often attributed lower candidate numbers to a generally low unemployment rate, fewer foreign workers, robust demand for staff and hesitancy to switch roles in the increasingly uncertain economic climate.
Pay pressures moderate slightly, but remain sharp
The ongoing imbalance between the supply and demand for workers drove further steep increases in rates of starting pay during June. Though sharp and well above the series average, the rate of starting salary inflation eased to the softest since August 2021, while temp wage growth edged down to a 12-month low.
Neil Carberry, Chief Executive of the Recruitment & Employment Confederation, said:
“The labour market is still strong, with demand for new staff high. That said, today’s data show that we are likely to be past the peak of the post-pandemic hiring spree. That pace of growth was always going to be temporary – the big question now is the effect that inflation has on pay and consumer demand over the course of the rest of the year. Whether we will see the market settle at close to normal levels, or see a slowdown, is unpredictable at this point. “Part of the reason for unpredictability in the market is a slower economy accompanied by severe labour and skills shortages. These are already proving a constraint on growth in many firms.The government should be thinking about how to ensure all its departments enable greater labour market participation and encourage business investment funds to help address this. “It is important to note that plenty of hiring is happening in this tight market – there are candidates out there for firms who get it right. Skilled recruitment professionals are at the heart of this, making a difference to opportunity and growth for companies and workers.
Commenting on the latest survey results, Claire Warnes, Head of Education, Skills and Productivity at KPMG UK, said:
“The apparent buoyancy of the jobs market overall continues to mask some increasingly concerning trends. Firstly, the fluctuations in demand for permanent and temporary workers in some sectors may be showing a sustained downward trend, as it becomes clear that current economic pressures are impacting employers’ confidence to grow. Secondly, the supply of candidates in all sectors continues to decline, with the rate of contraction accelerating to the quickest for three months in June. Added to that, competition for candidates pervades all sectors with employers offering financial incentives to retain talent, so increasing wage inflation. This latest data could be signalling that the UK jobs market may be more fragile than it seems.”
The Report on Jobs is unique in providing the most comprehensive guide to the UK labour market, drawing on original survey data provided by executive search recruiters and employers to provide the first indication each month of labour market trends.
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