The pool of available candidates in the UK for both permanent and temporary roles continued to shrink in June, according to the latest Markit/Recruitment Employment Confederation Report on Jobs.

The report, which draws on original survey data provided by recruitment consultancies, shows that while the number of permanent candidates fell at a softer pace than in May, the supply of temporary labour deteriorated at the quickest rate in 18 months.

“With fewer people currently looking for jobs, employers are having to increase starting salaries to secure the talent they need,” Tom Hadley, REC Director of Policy, said. “This is creating great opportunities for people with in-demand skills who are prepared to change jobs, but it’s also putting unsustainable pressure on many businesses.”

 The report also showed permanent placements continued to rise in June, despite the rate of expansion easing slightly since May’s 25-month peak. Growth in temp billings also softened in June, but remained steep overall.

Meanwhile, demand for staff continued to rise in June, with the rate of growth staying close to May’s recent peak. This was despite both permanent and temporary vacancies rising at slightly weaker rates than in the previous month. Permanent starting salaries rose at a rate that was the fastest in 19 months in June. Growth in hourly pay rates also quickened since May, and reached a six-month record.

On a regional basis, Scotland noted the sharpest growth in permanent placements, followed by the Midlands. The weakest rate of expansion was recorded in London. Scotland also saw the strongest upturn in temp billings of all monitored UK regions in June.

Private sector staff demand continued to rise sharply at the end of the second quarter. Demand for staff also increased in the public sector in June. Data indicated that demand growth was similarly strong for permanent and temporary roles, with the rate of increase picking up in the former, but slowing for the latter.

“Existing skills shortages are being exacerbated by Brexit,” Hadley said. “Investment in training the domestic workforce is vital to the long-term health of the jobs market, but it won’t allay employers’ fears about losing access to workers from the EU. The government needs to outline a five-year roadmap for post-Brexit immigration policy to enable businesses to plan effectively, and so the UK economy can flourish.”