Ongoing political and economic uncertainty in the UK continued to weigh on recruitment activity in July, according to the latest Report on Jobs from the Recruitment and Employment Confederation and KPMG. The report found that permanent staff appointments declined for the fifth month in a row, though marginally, while temp billings expanded at the slowest rate for 75 months, rising slightly overall.

“As has been the case throughout 2019 to date, Brexit-related uncertainty was a key factor weighing on hiring activity, as well as a lack of suitably skilled candidates,” the report stated. “Permanent staff appointments have now fallen in six of the past seven months.”

Billings received from the recruitment of temporary/contract workers rose in July however the rate of expansion was the slowest seen since the current period of growth began in May 2013. Recruitment consultancies that noted higher temp billings generally linked this to firm demand for short-term workers. However, there were also reports that subdued economic conditions and fewer than anticipated vacancies had weighed on growth.

Meanwhile, overall demand for staff continued to expand in July, with the rate of growth edging up to a four-month high. Demand for permanent workers increased at a quicker pace than for temporary staff during July. Permanent job vacancies rose at a solid pace that was the quickest since March. In contrast, demand for short-term workers rose at the slowest pace for seven years.

The report also found that the overall availability of candidates declined during July. Though sharp, the rate of deterioration eased since June and was the softest seen for two-and-a-half years.

Recruitment consultancies signalled a softer decline in the availability of permanent workers during July. Though still sharp overall, the rate of deterioration was the slowest seen for 30 months. At the same time, the supply of temporary workers continued to decline across the UK at the start of the third quarter however, the rate of reduction was modest and the weakest since the current period of deterioration began in July 2013.

James Stewart, Vice Chair at KPMG, commented, “Businesses continue to take a cautious approach to hiring as Brexit and economic uncertainty linger.”

“Permanent staff appointments have fallen for the fifth month in a row, while overall demand remains lacklustre as firms delay recruitment decisions,” Stewart said. “Uncertainty is also impacting the supply of labour, as people are choosing to sit tight until the outlook is clearer.”

Starting salaries awarded to newly placed permanent staff rose further amid reports of greater competition for workers. The rate of inflation, though sharp, was the softest seen since April 2017. Temporary pay rates also rose at a weaker pace.

“With the UK unemployment rate already at a four-decade low, candidate shortages in the labour market continued to push up rates of starting pay,” Stewart said. “This will likely cause concern for businesses looking to control their costs and recruit the right people for the long term.”