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Permancent Placements Decline for First Time Since February 2021
The main findings for October are:
Fresh fall in permanent staff appointments
Recruitment consultancies indicated that hiring activity waned at the start of the fourth quarter, as the number of permanent placements fell for the first time in 20 months and temp billings stagnated. Survey respondents often mentioned that heightened economic uncertainty had led some clients to reassess their recruitment plans, while candidate shortages also dampened hiring.
Vacancy growth eases again in October
Although demand for staff continued to increase in October, the rate of vacancy growth softened for the sixth month running. Notably, the upturn in demand was the weakest seen since the current period of expansion began in February 2021, with both permanent and short-term vacancies rising at slower rates.
Overall availability of staff continues to drop sharply
The total supply of candidates fell sharply once again during October, despite the rate of reduction easing fractionally to the slowest since April 2021. The decline in permanent staff availability remained more acute than that seen for temporary labour. When explaining the latest drop in candidate numbers, recruiters commented that people had become more reluctant to switch or seek out new roles due to concerns around the weaker economic outlook, fewer foreign workers and a low unemployment rate.
Starting salary inflation dips to 18-month low
Latest survey data pointed to a softening of pay pressures during October. Although sharp overall, pay awarded to new permanent joiners increased at the slowest rate for a year-and-a-half. At the same time, temp wage inflation slipped to its lowest since May 2021. According to recruiters, starting rates of pay increased due to the rising cost of living and competition for staff.
“The economic and political uncertainty of September and October has caused employers to become more cautious in their approach to hiring than during the frenzy of earlier in the year. Decision-making timelines for permanent hires have extended, for instance. But vacancies and pay are still rising, temporary worker demand is high, and permanent hiring has fallen for the first time in almost two years. Activity, overall, is still well in advance of pre-pandemic levels. We will need to watch how this story develops over months to come, but so far this data suggests heightened employer caution, not a retreat from the market. “It remains the case that firms in many sectors are struggling to hire, as hours worked remain below their pre-pandemic level despite record-low unemployment. We’re looking to the Autumn Statement later this month to help with removing the brakes on growth by reforming the apprenticeship levy to build a more effective skills system, improving support to help people move from inactivity to work, and align other policy areas – like work permits – with a growth strategy.”
Commenting on the latest survey results, Claire Warnes, Head of Education, Skills and Productivity at KPMG UK, said:
“The looming recession is clearly impacting the UK jobs market. Employers’ caution in hiring combined with fewer available candidates has resulted in the number of permanent placements falling for the first time in nearly two years. Now more than ever, it’s essential that we focus on upskilling the workforce to support and boost economic recovery when it comes. The jobs market will bounce back, particularly if we invest in the skills of the workforce across all sectors of 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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