Permanent placements fall amid uncertainty and reluctance to hire

January saw the first fall in permanent placements in the Midlands since July 2016 in January as firms were more hesitant to hire workers due to uncertainty.

The decrease was only modest, but the second-fastest of the monitored English regions that registered a decline in permanent placements (behind the North).

Only the South posted a rise in permanent placements, with contraction in the North, Midlands and London weighing on the UK average.

Temp billings received by recruitment firms in the Midlands continued to rise in January, extending the current sequence of expansion which began in March 2012.

The rate of growth accelerated from December’s 22-month low and was sharp overall. The rise in temp billings was also the fastest of the monitored English regions. Only the Midlands and South signalled a rise in temp billings, with London and the North indicating a contraction.

The pace of growth in permanent vacancies across the Midlands remained sharp in January. The upturn accelerated to a five-month high. Of the monitored English regions, the increase in available roles was slower than only the South.

Temporary vacancies also rose at a faster rate in January and at a pace slightly weaker than the UK average. That said, the increase was the fastest of the monitored English regions.

January data signalled a continued fall in the availability of permanent staff across the Midlands. The deterioration in permanent labour supply was the weakest in three months and slightly less marked than the UK average. This was attributed to the decrease to skill shortages and ongoing political uncertainty. The marked fall in supply was reflected across the monitored English regions, with London registering the fastest decline.

The supply of temp candidates declined further in January due to a shortage of skilled workers.

Starting salaries for permanent workers increased at a faster pace in January. Surveyed recruitment firms suggested that the sharper rise in starting salaries was linked to low candidate availability and skill shortages.

Kate Holt, consulting partner at KPMG in the Midlands, said: “These latest figures show that Brexit is beginning to bite, for both those seeking to hire permanent workers and those looking for permanent employment, as the pressures from ongoing uncertainty continue to rise.

“However, the Midlands has a strong market for those who are looking for temporary roles, particularly in the engineering and trade industries, and hourly rates are on the rise, so now is a good time to negotiate a good deal.”

Neil Carberry, chief executive at the REC, added: “This is the first month since July 2016 where permanent placement numbers have dropped, with weaker – but still positive – performance for temporary roles, and the lowest rate of vacancy growth for over two years. But we should be careful not to overreact – employment rates are high, and the performance of our labour market overall is still strong. We also know that key sectors such as accounting, engineering and IT are facing shortages.

“That said, the survey results are a sharp reminder to politicians in Westminster and in Brussels of the need to provide businesses with clarity about the path ahead, so they can invest with confidence.”