Permanent staff appointments and temp billings continued to fall in the UK in July, according to the latest Report on Jobs by the Recruitment and Employment Confederation and KPMG, compiled by S&P Global. 

The report showed a further decrease in permanent staff appointments in July, stretching the current downturn to 22 months. The rate of contraction was solid, though it eased since June, the report noted. Panelists also said a fall in vacancies plus an increase in candidate supply had driven the latest reduction in permanent placements.

By geography, permanent placements fell most noticeably in the South of England. In contrast, London saw a modest increase in placements.

Meanwhile, on the temp billings front, recruitment consultants recorded a fractional reduction during July to broadly offset the marginal growth recorded in June.

Where a decline was registered, lower activity at firms and the non-replacement of expiring worker contracts was cited as a link. Where growth was signalled, it was attributed in part to cultural events like the European Football Championship.

Temp billings rose in the Midlands and the North of England but fell in London and the South of England.

Kate Shoesmith, REC deputy chief executive, said in the report, “Employers are gradually emerging from the woods, gaining optimism for their businesses and the broader economy.”

Shoesmith added, “London is setting the pace with a growth in permanent placements, signalling the potential for an economic bounceback elsewhere in the country.”

July’s Report on Jobs also indicated a further reduction in vacancies, extending the current period of reduction to nine months. A rise in the respective index to 49.1, from 48.6 in June, signalled that the rate of contraction was modest and slower than in the previous month.

Permanent staff vacancies continued to fall in July and was the primary source of the decline in overall vacancies in July. It was the 11th successive month of decline, although the latest pace of contraction was modest.

On the other hand, temp demand saw a second consecutive monthly rise. Although growth was marginal, it was also stronger than in June.

Permanent staff vacancies across the private sector rose slightly in July to mark a second increase in the past three months. The rate of growth was marginal, however, and well below the equivalent measure for private temp workers, which rose for a fourth consecutive month and to the greatest degree since last October.

Public sector vacancies declined for both permanent and short-term staff during July. Rates of contraction were also steeper in each case.

Further data for permanent vacancies showed half of the sectors recorded growth in permanent staff vacancies during July. The strongest increase was for nursing and medical care staff, followed by engineering. The steepest decline in permanent staff was for IT and computing.

Temp vacancies were up across seven subcategories in July, led by blue-collar and engineering. The steepest decline in temp vacancies was seen for executive and professional workers.

“In the private sector, permanent staff vacancies rose in July and temp vacancies grew for the fourth consecutive month — to the highest levels since October last year,” Shoesmith said. “Anecdotes suggest growing demand during this big summer of ‘live’ sport, culture and music has led some in hospitality and leisure to shake off their early season caution on hiring.”

When it comes to staff availability, candidate numbers increased again. Although the rate of growth softened further on May’s 41-month high, the degree to which availability rose was again considerable and well above trend.

After accounting for seasonal factors, the Total Staff Availability Index registered 59.9, down from 61.0 in June. The latest data marked the 17^th successive month in which candidate availability has risen, and in July staff supply continued to increase for both permanent and temporary positions.

Permanent staff availability saw a steep rise in July, although the rate of growth slipped again to hit a five-month low. Recruitment consultants reported that a higher number of redundancies had increased the volume of available candidates. Some panelists commented that a lack of demand and vacancies had added to permanent staff availability, as per the report.

All areas of England saw growth in July. The sharpest increase was in London, followed by the North of England. The slowest rise was seen in the Midlands.

Temp availability saw growth for the 17th successive month during July. Growth was again marked, though eased to its lowest level since February. Panelists mostly reported that supply had risen due to redundancies and a reduction in the number of placements. Latest data showed slower growth in temp availability across England.

Whereas rates of expansion remained strong in London, the North of England and the South of England, a relatively modest increase was seen in the Midlands.

In terms of pay, permanent salaries continued to increase during July, in line with the trend seen for just short of 3 1/2 years.

The rate of inflation was marked, though a little softer than June’s recent high and below the survey’s historical average. Panelists reported that higher starting pay rates reflected a lack of suitable candidates and a willingness amongst firms to pay more to attract candidates. July’s survey data indicated that pay rose sharpest in London, followed by the North of England. Relatively modest inflation was seen in the Midlands and the South of England.

REC’s report also showed that temp pay rates rose again in July. However, the rate of inflation was marginal and the weakest in the 41 months that rates have increased. Shortages of suitable staff and the ongoing ripple effect of April’s increases in the living and minimum wages continued to push up pay rates. A general increase in temp availability was reported to have weighed on pay inflation.

The steepest increase in temp rates was seen in the North of England. In contrast, the South of England recorded a reduction in temp pay rates for the first time in over 3 1/2 years.

Jon Holt, chief executive and senior partner of KPMG in the UK, said, “While the Bank of England’s easing of interest rates will have provided a much-needed lift to businesses and the investment market, the impact on the economic outlook will not be felt immediately. This latest survey data was gathered before the rate cut, and it gives a subdued picture of the labour market as the downturn moves into its second year.”

Holt continued, “Despite the stability of a new government and easing inflationary pressures, employer confidence to recruit has not yet returned, leading to delays with permanent hiring and even a small contraction in the temporary market as worker contracts are not renewed. In the sectors where employers are still hiring, a lack of skilled talent continues to drive pay growth.”