Ongoing political uncertainty in the UK impacted recruitment activity in October, according to the latest Report on Jobs from the Recruitment and Employment Confederation and KPMG.

Permanent staff appointments fell, which was widely linked to Brexit-related uncertainty, as many employers had chosen to cancel or postpone hiring until there was greater clarity over the outlook.

By region, permanent staff appointments declined sharply across the Midlands, the South of England and London in October. In contrast, the North of England registered a solid increase in permanent placements.

Meanwhile, recruitment agencies signalled a further upturn in billings received from the employment of short-term workers in October.  Panel members that noted higher temp billings generally linked this to firmer demand for temporary staff, which in many cases was due to firms choosing to hire short-term workers as opposed to permanent ones. REC found that the respective seasonally adjusted index indicated that the rate of growth eased to a marginal pace that was much slower than the historical trend. Higher temp billings were recorded in the Midlands and the North of England, while declines were seen in the South of England and London.

Demand for staff was likewise relatively lacklustre, with vacancies expanding at the slowest rate for over seven-and-a-half years. Growth of demand weakened for both permanent and short-term staff.

An uncertain outlook also weighed on overall candidate availability, which fell at the quickest rate since June. Reduced labour supply meant that employers had to increase pay offers again, with starting salaries and temp wages rising at marked rates.

The overall increase in staff vacancies in October was driven by the private sector, as demand for workers fell across the public sector.

Recruitment consultancies across the UK registered a sustained decline in total candidate availability in October. The rate of contraction was the quickest recorded for four months and sharp overall. The reduction was predominantly driven by a marked fall in permanent staff supply, as the downturn in temporary candidate numbers softened.

In terms of pay, salaries awarded to newly-placed permanent staff continued to rise sharply in October, despite the rate of inflation easing from the previous month. Average pay for short-term staff also rose markedly. Increased pay offers were widely linked to a shortage of suitably skilled candidates.

Neil Carberry, Recruitment & Employment Confederation chief executive, commented, “These figures underline why this needs to be a jobs election. The labour market is strong, but permanent placements have now dropped for eight months in a row, and vacancies growth has fallen to its lowest level since January 2012. One bright spark is the temporary labour market, which continues to provide flexible work to people and businesses that need it during troubled times.”

“Ending political uncertainty and getting companies hiring again is vital – but we must also look to the long term future of work,” Carberry continued. “Jobs must be front and centre during this election campaign, and we will be launching our REC manifesto for work next week. We will be urging all political parties to run on policies which support and enhance the UK’s flexible labour market – allowing businesses to create jobs, employees to build careers and the economy to grow.”

James Stewart, Vice Chair at KPMG, also commented, "Businesses are still waiting to hear that starting gun, and until there is some certainty around Brexit and now the election, employers continue to stall on creating vacancies and making permanent hires.”