The latest jobs activity report from KPMG and REC highlighted a further increase in recruitment activity during August with temp billings growth being the weakest seen for a year and a half.
The report noted that the recent slowdown in hiring reflected greater economic uncertainty, rising costs and candidate shortages, according to recruiters.
The August survey data also signalled a further easing in vacancy growth, which slipped to an 18-month low. Total candidate numbers fell at a slightly softer, but still rapid pace, which combined with the increased cost of living led to further sharp increases in starting pay for both permanent and temporary staff.
UK recruitment consultancies signalled further increases in both permanent staff appointments and temp billings during August. While strong demand for workers and efforts to fill vacancies supported the overall upturn in hiring, there were reports that greater economic uncertainty, rising costs and candidate shortages had dampened growth.
There was also a further slowdown in growth of vacancies with the latest increase in demand for staff at the weakest seen for 18 months, with recruiters signalling softer rises in both permanent and temporary vacancies.
Average starting salaries for permanent staff continued to rise rapidly in August, though the rate of inflation softened further from March’s survey record. Notably the rate of salary growth was the softest seen for over a year. Temp wages meanwhile rose at a slightly sharper pace, albeit one that was the second slowest since June 2021. Higher rates of pay were frequently linked to intense competition for candidates and the rising cost of living.
The overall supply of candidates continued to fall sharply in August, with permanent worker availability deteriorating at a quicker pace than that seen for short-term staff. A generally tight labour market, fewer foreign workers and a reluctance to seek out new roles due to uncertainty weighed on staff supply. That said, the decline in total candidate numbers was the softest seen for 16 months.
Latest data signalled a further slowdown in vacancy growth across the private and public sectors in August. The steepest increase in demand was seen for private sector staff — with permanent and temporary positions rising at identically sharp (albeit slower) rates. The weakest increase in vacancies was once again signalled for short-term positions in the public sector, where growth eased to a 17-month low.
Nursing/medical/care topped the permanent staff demand league table in August, followed closely by hotel & catering. The softest upturn in vacancies was once again signalled for retail.
All 10 monitored job categories recorded higher temporary vacancies midway through the third quarter. Nursing/medical/care signalled by far the steepest increase in demand for short-term workers, while executive/professional saw the weakest.
Claire Warnes, head of education, skills and productivity at KPMG UK, said the economic uncertainty continues to impact all aspects of business.
“August’s data show an increasingly challenging jobs market, both in the sharp decline in the supply of candidates and in the slowdown in recruitment which we have seen for the last few months,” she said.
“Despite these challenges, it’s vital that investment in people continues. Businesses may be better able to weather the economic storm through sustained investment in upskilling the available workforce.”
