Hiring activity fell across Scotland during June amid reports that economic uncertainty and candidate shortages had dampened recruitment, according to the latest Royal Bank of Scotland Report on Jobs survey compiled by S&P Global.

Scotland’s Report on Jobs follows the Recruitment and Employment Confederation’s UK Report on Jobs published earlier this week which also found that lingering uncertainty over the UK’s economic outlook continued to weigh on hiring decisions in June.

Permanent staff appointments in Scotland saw a further fall in June, which extended the current sequence of contraction to five months. The rate of decrease quickened from May and was solid overall. Subdued business confidence and candidate hesitancy to seek new roles due to the weaker economic climate hindered recruitment, anecdotal evidence suggested. The rate at which permanent placements decreased in Scotland was weaker than that seen across the UK as a whole.

Going against the broader UK trend, temp billings across Scotland fell for the ninth successive month in June. The pace of reduction was sharp overall, despite moderating to the softest in three months. Panellists reported that candidate scarcity, reduced amounts of new work and hiring delays were key factors driving the latest reduction in billings.

Meanwhile, recruitment consultancies across Scotland signalled a strong decrease in the number of candidates available for permanent jobs during June. Though much softer than the average recorded over the current 29-month sequence of contraction, the pace of decline was the strongest in three months. Recruiters noted that skill shortages and lingering market uncertainty had impacted candidate numbers.

The trend seen in Scotland compared to the UK as a whole continued to diverge, as candidate availability improved at the UK level and at the quickest pace in two-and-a-half years.

Short-term staff availability fell across Scotland in June, with contractions noted in each month since March 2021. The decrease, though weaker than that seen in May and much softer than this time last year, remained rapid overall. According to recruitment agencies, given the uncertain economic outlook, candidates were often reluctant to switch roles, with many favouring permanent jobs over short-term contracts.

As for June’s starting salaries, permanent starting salaries increased again across Scotland at the end of the second quarter. The rate of growth quickened from May’s 27-month low and was historically sharp overall. According to panellists, shortages of skilled candidates and competition for labour drove up pay.

Scottish recruitment agencies signalled a rise in temp pay rates in June, thereby stretching the current run of inflation to 31 months. That said, the pace of increase softened for the second month in a row to the weakest recorded during the 31-month period.

In June, Scotland reported a stronger rise in permanent vacancies. After having slowed for 13 months straight, the rate of expansion for permanent staff demand accelerated at the end of the quarter and outpaced that seen at the UK level.

Supporting the upturn were sharp rises in permanent vacancies across IT & computing and blue-collar sectors.

Following a five-month period of contraction, temp vacancies rose across Scotland during June. The respective seasonally adjusted index signalled a solid rise in demand for temporary workers, albeit one that was slightly softer than that recorded for the UK as a whole.

Of the eight monitored job categories, IT & computing topped the temporary staff demand rankings, followed by accounts & financial.

Sebastian Burnside, chief economist at Royal Bank of Scotland, said, “Despite vacancies increasing, and notably a fresh rise in temp vacancies, this caution around the outlook combined with candidate shortages meant that recruiters struggled to fill roles. A tight labour market also meant that firms raised their starting salaries and wages further in order to attract suitable candidates.”