And the outlook is for a continued slowdown in recruitment activity leading into the last quarter of the year.
The survey found that permanent staff appointments and temp billings expanded at the weakest rates in over a year and a half, as uncertainty over the outlook and limited staff supply hampered growth.
At the same time, overall vacancy growth continued to ease, with both permanent and temporary staff demand rising at the softest rates since February 2021.
Relatively strong demand for staff and efforts to boost capacity supported a further increase in hiring activity at the end of the third quarter. However, the weaker economic climate and candidate shortages dampened overall growth.
The rising cost of living and competition for scarce workers drove further increases in starting pay for both permanent and short-term workers, despite the rate of starting salary inflation. Temp wage growth also edged down to its weakest since June 2021.
Although there were signs of the downturn in labour supply easing in September, candidate numbers continued to fall sharply. Permanent staff availability deteriorated at a quicker pace than that seen for temp workers.
The survey found that there was hesitancy among job candidates to apply for new roles because of economic uncertainty.
The steepest increase in demand for staff was seen for temporary workers in the private sector during September. The softest expansion was seen for permanent vacancies in the public sector.
The highest demand for permanent staff decreased in nearly all categories except for retail. Nursing/medical and care recorded the strongest increase in permanent vacancies, while construction saw the lowest.
Claire Warnes, head of education, skills and productivity at KPMG UK, said deepening economic uncertainty has meant that workers are choosing to stay put in current roles, rather than apply for new roles, leading to a moderation in the overall rate of vacancy growth.
“Some employers, even those who anticipate that the recession may be short, are taking steps now to contain costs, including hiring freezes,” she said.
“Those employers who continue to invest in their workforce, particularly upskilling, may find they weather the recession better and will be in a stronger position to benefit from the upturn as and when it comes.”
