Permanent placements in the UK recruitment fell to the steepest level since August 2023 amid widespread reports of reduced vacancies, according to the latest Report on Jobs by the Recruitment and Employment Confederation and KPMG compiled by S&P Global.

Respondents from the REC survey also noted that the government budget in late October led to uncertainty and the reassessment of staffing needs by clients. The decline in permanent placements was broad-based. The South of England recorded the steepest drop, followed by the North of England.

Temp billings declined for a fifth straight month in November, although the reduction was slower than rates in September and October. Some panellists reported the non-replacement of temp staff contracts amid reduced requirements. The late October government budget was again noted as a source of considerable uncertainty in the recruitment market. Apart from a marked rise in the Midlands, the reduction in temp billings was broad-based and led by the North of England.

Meanwhile, vacancy numbers continued to decline during November. Moreover, with the respective index declining to 43.9 from 46.1 in October, the rate of contraction was the steepest recorded by the survey since August 2020. It was the thirteenth successive month in which a fall in vacancies has been registered..

November’s survey also found that demand for private sector workers, both permanent and temporary, declined. A much faster fall in vacancies was recorded for permanent staff, with only a marginal contraction seen for temporary workers.

For the public sector, steep declines in vacancy numbers were recorded for both permanent and temporary staff.

By sector, permanent staff vacancies declined across all subsectors in November. Contraction rates were generally faster than in the previous month and led by executives/professionals.

At the same time, except for blue-collar and hotel & catering, all sub-sectors saw a downturn in temporary staff vacancies during November. Executive/professional and IT/computing recorded the steepest contractions.

REC’s Report on Jobs also found that overall staff availability increased again in November, as has been the case since March 2023. The growth rate accelerated since October, as indicated by the seasonally adjusted Total Staff Availability Index reaching 59.8 (from 59.2). Similarly strong rises in availability were recorded for permanent and temporary workers.

Staff availability to fill permanent positions rose sharply in November, with growth hitting its highest in three months. The latest data marked the twenty-first month in a row that availability has risen, with many firms reporting an increased volume of redundancies in November. Permanent staff availability increased across England, with the strongest growth seen in the Midlands, followed by the North of England.

November data marked another month of rising temp availability, extending the trend that began in March 2023. Growth was again strong, though softer than October’s near four-year record.

Panellists widely reported a lack of vacancies and more redundancies as reasons for the latest upturn in availability. Growth was led by the Midlands, followed by the South of England. Rates of increase were nonetheless still sharp in both London and the North of England.

In terms of pay, the report showed an increase in permanent starting salaries during November, although the rate of inflation was relatively modest. Some panellists reported a willingness among firms to pay higher salaries for skilled candidates and senior positions. The South of England saw a reduction in salaries. In contrast, solid growth was seen in the North of England and London.

Temp rates increased in November for the second month in a row, although growth was modest and slower than in October. While some staff positions were reported to be attracting higher pay rates, increased candidate availability tended to limit aggregate temp pay growth.

At the English regional level, a marginal decline was registered in the Midlands as growth was seen elsewhere.

Neil Carberry, REC Chief Executive, said in a press release, “It should be a surprise to no one that firms took the time to re-assess their hiring needs in November after a tough Budget for employers. The drop in vacancies was led by private sector permanent roles, and slower permanent recruitment billings across the month also reflected this trend.”

“The resilience of temporary recruitment offers some hope – private sector temporary hiring activity was almost flat across the country, by comparison with the drop in permanent hiring, and there was growth in some regions,” Carberry added. “Firms are likely to rest more on temps while they manage the current uncertainty, and that only serves to emphasise again the value of flexible forms of work to companies and people who need to find work quickly after redundancy.”

Jon Holt, Group Chief Executive and UK Senior Partner KPMG, said, “Businesses are having to weigh up the prospect of increasing employee costs following the budget, which has led to an accelerated slowdown in hiring activity across the board. While the data was already heading in that direction, permanent placements saw their steepest reductions in over a year last month, and temporary roles also saw a fifth consecutive decline.”

“This slowdown, alongside a growing availability of candidates in the market, could put more downward pressure on wage inflation, which remained largely unchanged on last month’s 44-month low,” Holt said.