Permanent staff placements fall for the first time in 77 months

January data pointed to a fall in the number of people placed into permanent job roles across the North of England, a new report shows.

The KPMG and REC, UK Report on Jobs: North of England is compiled by IHS Markit from responses to questionnaires sent to around 100 recruitment and employment consultancies in the North of England.

The reduction was the first seen since August 2012, and the fastest for just over six-and-a-half years.

Some recruitment agencies commented on a hesitancy in hiring among their clients due to Brexit-related uncertainty.

Permanent staff appointments also fell at the national level at the start of 2019.

Albeit only marginal, the decline was driven by contractions in three of the four monitored English regions. The South of England was the only area to record growth.

Billings received from the employment of short-term workers in the North of England fell for the first time in six-and-a-half years during January.

Although recruitment consultancies reported only a marginal rate of decline overall, the result contrasted with a modest expansion across the UK as a whole.

The latest UK-wide increase was, however, the softest since September 2015, with a reduction in the capital also weighing on the UK average. The Midlands posted the fastest rate of growth, outpacing the South of England.

January survey data pointed to softer increases in demand for both permanent and temporary workers in the North of England.

Notably, permanent staff vacancies grew at the slowest rate for 29 months.

Despite registering a solid rise overall, growth of demand was softer than that seen at the national level.

Short-term positions also rose at the weakest rate since August 2016, and at a pace that was slower than the UK average.

Permanent staff supply has now contracted in each month for the past six years in the North of England.

Moreover, the pace of decline quickened compared with December, registering the fastest fall since December 2017.

Recruitment consultancies suggested that shortages were primarily for skilled workers.

The availability of temporary staff in the North of England also fell during January, with the rate of decline accelerating to the quickest in five months.

As was the case with permanent staff availability, recruiters mentioned a shortage of skilled workers.

At the national level, there was also a fall in availability of temporary workers in January.

The overall pace of decline was sharp and the fastest for 14 months.

At the regional level, quicker falls in all four monitored English regions drove the latest decline, with the Midlands recording the sharpest contraction.

The rate of starting salary inflation across the North of England remained sharp in January, despite softening from December.

Recruiters in the region widely mentioned that competition for scarce candidates had contributed to the latest upturn in pay.

That said, the rate of inflation was not as strong as seen across the country as a whole.

UK permanent starting salaries rose markedly during January.

The pace of inflation accelerated to its fastest since October 2018. Quicker salary growth in the Midlands and South of England contrasted with a slower expansion in London.

Remuneration awarded to temporary workers across the North of England also increased strongly in January.

This was despite wage growth easing to its slowest since October 2018.

Some ancedotal evidence linked the latest rise to a shortage of skilled workers.

Pay inflation in the region was softer than the UK average for the fifth month in a row.

Chris Hearld, Northern regional chairman at KPMG UK, said: “Northern businesses might want to hire staff, but a chronic shortage of labour – particularly skilled workers – is now starting to bite.

“Not only will companies feel under-resourced, they are also seeing wage and salary demands increase which will put more pressure on the bottom line.

“The message coming from the data is clear – the local business community needs to make sure that it continues to invest in creating, attracting and retaining talent if it to remain resilient and competitive.”