Candidate shortages and economic uncertainty in the UK have weighed in on recruitment in November, according to the latest Report on Jobs by the Recruitment and Employment Confederation, KPMG and S&P Global.

The report found that permanent placements fell for the second successive month, although at a softer rate than that seen in October. Meanwhile, temp billings rose modestly after broadly stagnating in the previous month.

Three of the four monitored English regions registered lower permanent staff appointments in November, with the quickest reduction seen in London. The Midlands bucked the trend, and recorded a fresh rise in placements, albeit one that was modest.

Temp billings continued to rise sharply in the South of England while it expanded modestly in London. Further declines were registered in the Midlands and the North of England.

Meanwhile, overall demand for workers expanded at the softest rate since February 2021 during November. While temporary vacancies continued to expand more sharply than that seen for permanent roles, in both cases the increases were the slowest seen for 21 months and below their respective long-run trends.

The steepest increase in demand for staff was seen in temporary workers in the private sector. In contrast, temporary vacancies in the public sector fell for the first time since December 2020, albeit marginally. Growth of demand for permanent workers meanwhile moderated across both the private and public sectors, but remained strong overall, the REC noted.

Eight of the ten monitored job categories registered increased demand for permanent staff during November, led by nursing/medical/care. Vacancies were broadly unchanged in construction, while IT & computing noted a slight reduction.

The upturn in demand for temporary workers was broad-based across all ten employment categories in November. The quickest rise in vacancies was seen in Nursing/Medical/Care. IT/Computing slipped to the bottom of the rankings and saw a marginal uptick.

Although pay pressures remained historically elevated during November, the report found that rates of inflation for both starting salaries and temp wages eased further. The latest increase in permanent starters' pay was the least marked since April 2021, while temp pay growth moderated to an 18-month low. Higher rates of pay were generally linked to competition for workers and the rising cost of living.

In terms of supply, the overall availability of workers continued to decline during November, and at a steeper pace than seen on average since the survey began 25 years ago. Tight labour market conditions, fewer foreign workers and a greater hesitancy among people to take up new roles due to increased economic uncertainty all dampened candidate numbers, according to recruiters. However, the latest fall was the weakest recorded for just over a year-and-a-half amid softer declines in both permanent and temporary staff supply.

Claire Warnes, Partner, Skills and Productivity at KPMG UK, said, “Of particular note this month is the softer rise in permanent starters’ salaries, with the rate of pay inflation easing to a 19-month low in November. This reflects the combined effects of employers reining in recruitment, candidate availability continuing to decline, and workers staying put for job security. So despite the cost of living pressures that households are enduring and the industrial relations impasse within many sectors, wage growth may well be trending down in the months ahead. Employers who are able to offer existing workers and candidates’ opportunities to upskill and reskill, rather than focusing solely on core pay, may well benefit most in this tight jobs market.”

Neil Carberry, Chief Executive of the REC, said, “This month’s data emphasises that while employers are moderately more cautious in the face of economic uncertainty, this is not yet a major slowdown in hiring. While permanent recruitment activity has dropped from the very high levels of earlier in the year, the pace of that drop has tempered this month.”

Carberry continued, “In contrast, temporary hiring has accelerated again in the run-up to Christmas. There are clearly some seasonal factors at work here, with retail and healthcare recruitment leading the way. But there may also be some switching to temporary going on, as firms maintain flexibility ahead of next year.”