Heightened political and economic uncertainty regarding Brexit continued to weigh on hiring activity in the UK at the end of the third quarter, according to the latest Report on Jobs from the Recruitment and Employment Confederation and KPMG.

The report showed that permanent staff appointments fell for the seventh month in a row, while temp billings rose only modestly. 

Brexit-related uncertainty was by far the most commonly cited factor weighing on permanent placements, which led clients to delay or cancel hiring plans.

All four of the monitored English regions except the North of England registered lower permanent staff appointments in September. The increase in the North of England was only marginal.

Meanwhile, the report also showed that a number of panellists mentioned that employers were taking on temp staff as opposed to hiring permanent workers. At the same time, there were reports that uncertainty had delayed projects and hiring decisions, which had in turn weighed on overall growth.

The North of England and the Midlands both registered marked increases in temp billings during September, while the South of England saw only a slight expansion. Meanwhile, a reduction was seen in London for the second month in a row.

Vacancy growth eased for the second month in a row in September, with overall demand for staff rising only modestly. Notably, this marked the slowest expansion of vacancies since January 2012. Demand for permanent staff increased at the softest pace for 92 months, which offset a slightly stronger rise in temporary vacancies.

September data showed that demand for staff continued to rise across the private sector, but was relatively weak in the public sector.

“The Brexit impasse continues to affect the jobs market with employers stuck, unable to make informed decisions, and people unwilling to risk seeking new roles,” James Stewart, Vice Chair at KPMG, said.

“Given that it’s the weakest increase in job vacancies since 2012 and the longest period that permanent staff appointments have fallen since the global financial crisis, it would seem that it’s proving difficult for businesses to shake off the heightened uncertainty and unknowns. So with the deadline fast approaching, they may well be waiting to get clarity on the future direction of Brexit before making any key decisions on hiring and investment,” Stewart said.

The REC’s data also pointed to a further marked drop in the overall availability of candidates in September. The rate of contraction was the joint-weakest for six years.

The supply of permanent workers fell at a slower (but still sharp) rate, while the availability of temporary workers declined at a slightly quicker pace.

Starting salaries increased at a faster pace in September. The rate of inflation quickened from August's 32-month low to signal a sharp increase in pay overall. In contrast, temp pay rates rose at the softest pace since November 2016.

Neil Carberry, Recruitment & Employment Confederation chief executive, commented, “There are deeper issues which must be addressed to secure the UK’s future prosperity. Productivity is falling, and there are skills shortages in vital sectors across the economy. Solving these problems must be top of the government’s to-do list once the Brexit deadlock has been broken.”