Staff demand in the UK has increased at its fastest rate since April 2015, however with candidate availability continuing to decline, employers are raising pay rates higher than ever, according to the latest IHS Markit/REC Report on Jobs.

Growth of permanent starting salaries quickened for the fourth month straight in August and was the quickest rate of pay inflation seen since October 2015. Temp pay also increased at a faster pace, rising at the steepest rate for 16 months in August. The rises in pay comes amid a further drop in candidate availability as the pool of candidates ready to fulfil permanent job roles continued to decline sharply in August, with the rate of deterioration slightly quicker than seen in July. Temp staff supply meanwhile fell to the greatest extent in 20 months.

Private sector staff demand picked up again in August, with the number of vacancies rising at similarly sharp rates for both permanent and short-term staff. Demand for public sector staff remained less marked than seen in the private sector, but was nonetheless steep overall. Growth in demand for temporary public workers continued to outstrip that for permanent workers in the sector.

Demand for permanent workers rose across all monitored job categories during August. The steepest increase in vacancies was seen in IT & Computing, followed by Accounting/Financial. Construction saw the weakest upturn in permanent staff demand.

Occupying top position in the temporary/contract staff demand rankings during August was Blue Collar. Engineering and Nursing/Medical/Care completed the top three. Nonetheless, all other job categories also registered sharp rates of growth.

“Employers are increasingly turning to recruitment agencies as it becomes harder to find the people to fill the jobs available,” Kevin Green, REC Chief Executive, said. “There are two trends at play. Businesses are seeking more professional and managerial capability, so we’re seeing high demand for roles like financial directors, analysts, and compliance and HR professionals. Meanwhile, there is a significant shortage of people to fill blue collar roles such as drivers, electricians, and construction workers, and this is being exacerbated by a fall in net migration from the EU.”

“In many areas of the jobs market candidate supply cannot meet demand,” Green said. “Employers are having to offer more money to secure the people with the skills they need. While the working population in general has experienced a pay squeeze, there are clearly opportunities now to earn more by moving jobs.”

Meanwhile, the report showed that the number of people placed into permanent job roles continued to rise sharply in August, with the rate of growth easing only slightly from July’s recent record. Temp billings also rose with the rate of expansion unchanged from July’s 29-month high.

Growth of permanent placements was strongest in the Midlands and the North of England. Meanwhile, London continued to record only a marginal rate of expansion that was the slowest of all monitored regions. Temp billings data split by region showed that the Midlands saw the fastest rate of growth, closely followed by the South of England. Nonetheless, all of the remaining regions monitored by the survey also noted steep rates of expansion.