In October 2024, the latest UK Report on Jobs showed a sharp drop in permanent job placements, marking over two years of contraction in the sector. The decline accelerated to its fastest rate since March. The Report on Jobs, by the Recruitment and Employment Confederation, KPMG and S&P Global, provides a comprehensive guide to the UK labour market.

October’s survey data revealed a 25th successive monthly decline in permanent placements. The latest fall was also the sharpest since March. Panellists noted recruitment freezes at clients amid a lack of business confidence. Some firms attributed this to uncertainty created by the late October government Budget.

The decline in permanent placements was broad-based across England. The steepest fall was again seen in the South of England. London recorded the smallest contraction.

Meanwhile, the Report on Jobs noted the steepest fall in temp billings for seven months. It was also the fourth successive monthly decline. Panellists reported a lack of demand for candidates amid evidence of some firms struggling to replace expiring business contracts. Uncertainty related to the October government Budget was again also noted.

Temp billings declined steeply in London and the South of England. In contrast, solid growth was seen in the Midlands.

Vacancy numbers continued their year-long decline in October, with the index dropping for the third consecutive month to 46.1, down from 47.6 in September. This decline signals an accelerated rate of contraction, reaching its sharpest pace since January 2021.

Permanent vacancies declined in October at the steepest pace since the start of 2021. The latest data marked the 14th successive month in which a reduction in permanent vacancies has been registered. For temp vacancies, a third successive monthly fall was registered, with the contraction the sharpest in over four years.

October’s survey data signalled declines in private sector vacancy numbers for both permanent and temporary workers. Similarly, modest contractions were seen in each case. Demand for public sector workers – both permanent and temporary – also declined in October. Rates of contraction picked up in each case.

Except for marginal growth in blue-collar and engineering, all sectors recorded a fall in permanent vacancies during October. The steepest declines were seen in retail and IT & computing.

Only blue-collar recorded growth in temp vacancies during October, and even here, the net increase was only marginal. Executive & professional and IT & computing registered the steepest contractions in temp vacancies.

Further data from the report showed that the seasonally adjusted Total Staff Availability Index rose slightly in October to 59.2 (up from 58.8 in the previous month) to indicate another increase in overall staff supply. Growth has now been registered for 20 successive months. Sharp rises in the availability of both permanent and temporary workers were recorded during October.

Permanent staff availability rose again in October, extending the current period of growth to 20 months. Furthermore, the pace of expansion was historically steep and faster than in September. Redundancies and a lack of demand were widely reported to have led to growth in job seekers.

Growth of perm staff supply was seen across England, albeit to varying degrees. The steepest increase was recorded in London, followed by the North of England. The Midlands registered the slowest growth.

In line with the trend since March 2023, temp availability increased in October. The pace of expansion was also the steepest registered by the survey since December 2020. Redundancies and a lack of vacancies underpinned the latest rise in availability. Similar-sized increases in temp supply were recorded across England. London registered the steepest increase, followed closely by the Midlands.

The Report on Jobs showed that permanent starting salaries increased again during October, but the rate of (salary) inflation maintained its recent downturn, falling for a fourth successive month to its lowest since February 2021. Where pay increased, this was linked to competition for high-quality candidates in key roles. Only a marginal increase in salaries was seen in London. In contrast, marked growth was registered in the Midlands.

The latest data showed a return to rising temp pay rates following little change in September. Although modest, the increase in temp pay was the best since June. Higher-level candidates continued to attract and demand higher pay rates, according to panellists. By region in England, the Midlands recorded solid growth in temp pay. In contrast, little change was seen in the South of England.

Neil Carberry, REC Chief Executive, said in a press release, “These figures are a timely reminder that demand from employers for new staff has weakened since the election – though the overall picture remains resilient by comparison to pre-pandemic. There are a few positive signs in this month’s data – like more robust performance in London, which is often a bellwether. But things now stand in the balance – firms need to be persuaded to invest, with recent changes to NI (National Insurance) thresholds, the minimum wage and prospective changes to employment law all causing concern.”

Jon Holt, Group Chief Executive and UK Senior Partner KPMG said, “Uncertainty over the Autumn Budget saw businesses continue to put hiring plans on hold during October, leading to the steepest contraction in permanent staff appointments since March. But employers didn’t turn to temporary staff to fill gaps, with these appointments also facing their biggest reduction in seven months.”

Holt added, “While businesses are still willing to pay more for top talent, the growing pool of available candidates means salary inflation was at its weakest since early 2021.”