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UK staff appointments down in September amid uncertain outlook

UK staff appointments down in September amid uncertain outlook

October 7, 2024

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Permanent staff placements and temp billings in the UK fell in September 2024, according to the latest Report on Jobs by the Recruitment and Employment Confederation and KPMG, compiled by S&P Global.

The Report on Jobs provides a guide to the UK labour market, drawing on original survey data provided by recruitment consultancies and employers to provide the first indication each month of labour market trends.

The fall in permanent placements extends the current downturn to two years. The rate of contraction was again marked, though it eased slightly  from August’s five-month record. Panellists noted that clients were adopting a cautious approach to hiring amid uncertainty in the outlook. The report found that this was partly linked to perceptions of unclear government policy ahead of the Budget in late October.

The reduction in permanent placements was common across all regions of England. The steepest decline was seen in the South of England, the smallest in the Midlands.

September’s report showed that for a third month in a row, temp billings declined. The rate of contraction also accelerated, reaching its steepest since April. Firms noted a lack of demand amid tight client budgets and an uncertain business environment.  

London recorded by far the steepest reduction in temp billings of the four English regions covered by the survey. In contrast, there was a marginal increase in the Midlands.

September’s survey also showed a further reduction in the number of vacancies. It was the eleventh successive month that the survey recorded a decline, and a fall in the respective index to 47.6 from 49.0 in August pointed to an acceleration in the rate of contraction to its steepest since March.

Permanent vacancy numbers maintained their recent downward trend in September, falling for the 13th successive month. The rate of contraction was also the steepest recorded by the survey since March.

Both private and public sector permanent staff vacancies declined during September. The steeper contraction was again registered for public sector workers.

By sector, permanent vacancies declined across six sectors during September, with the steepest fall seen for retail workers. Where growth was registered, the best performance was recorded for nursing and medical care.

Temp staff demand meanwhile fell for a second month in a row, and although modest, the rate of contraction was the fastest since July 2020. Both the private and public sectors registered reductions in temp worker demand, although the contraction was again much greater for the latter.

Except for blue-collar, which recorded  modest growth in September, temp vacancies declined across all categories. There was some variance in rates of contraction. Executive & professional posted the most pronounced contraction, with the slowest seen in hotel and catering.

September’s report showed another steep increase in staff availability. However, growth was slower according to the seasonally adjusted Total Staff Availability Index, which recorded 58.8, down from 59.8 in August. That was the lowest reading since February.

Nevertheless, staff availability has risen for nineteen successive months, with noticeable growth recorded for both permanent and temporary workers.

The availability of staff to fill permanent vacancies increased steeply again in September, extending the current period of growth to 19 months. However, the rate of expansion did soften, easing to its lowest since February. Where an increase in availability was registered, this was linked to higher redundancies and a lack of demand for staff.

Permanent staff availability increased across England, albeit to varying degrees. Steep growth was registered in the North of England and London but was noticeably slower in the South.

The report recorded an increase in temp availability in September for the 19th successive month. The latest expansion was also sharp, despite easing to its lowest since February. According to panellists, less vacancies and more people out of work led to the increase in temp availability.

Temp availability rose at similarly steep rates across England, with the most pronounced increase seen in the South of England.

While typical starting salaries increased for the 43rd successive month in September, the rate of inflation was relatively modest and the slowest in this sequence. Shortages of suitable labour continued to push up salaries for higher calibre candidates, according to panellists. However, salary inflation was limited by the greater availability of job hunters and cooling market demand.

The steepest increase in salaries was seen in the Midlands. In contrast, only a marginal rise was recorded in the North of England.

Temp pay rates were very slightly lower in September, ending a three and-a-half-year period of inflation. More candidates and a lack of available roles were reported to have weighed on temp pay levels, according to the latest anecdotal evidence.

Only in the North of England was an increase in temp pay recorded in September.

In a press release, Neil Carberry, REC Chief Executive, said, “This is a picture of a jobs market waiting for a signal. Recruiters report that projects in client businesses are ready to go, but confidence is not yet high enough to push the button. The market for permanent jobs declined in September but more slowly than in the month before, while the temporary hiring market was more resilient and grew in some places. Private sector vacancies are close to flat, which also suggests businesses are holding position.”

Jon Holt, group chief executive and UK senior partner KPMG, said, “While some sectors are still finding it difficult to recruit people with the right skills, the overall pool of available candidates is growing as companies are still faced with tough decisions on their headcount.”

Holt added, “This has led to a softening of salary inflation, which dropped to its lowest point since February 2021. The Bank of England will likely be encouraged by this easing in pay pressures, which could strengthen the case for a further cut in interest rates in the upcoming November meeting.”

“The slowing of hiring activity seen in September is to be expected as businesses apply the brakes on recruitment ahead of the Budget and wait for clarity on future taxation, business, and economic policy. The government needs to continue to give chief executives confidence in the UK’s macroeconomic conditions and the country’s route to stronger growth.”