North West sees decline in permanent placements ease during June

Jennifer Lee

The latest KPMG and REC UK Report on Jobs survey pointed to a softer decline in recruitment activity during June.

Both permanent placements and temporary billings fell at slower rates compared with May, albeit still sharply overall.

The reductions were predominantly driven by another steep contraction in demand for workers amid the coronavirus disease 2019 (COVID) pandemic.

That said, the drop in vacancies eased for the second month running.

Meanwhile, widespread reports of redundancies and furloughed workers led to another substantial increase in candidate availability.

The plunge in demand for workers combined with rising staff supply led to sharp falls in starting salaries and temp wages.

The report, which is compiled by IHS Markit, is based on responses to questionnaires sent to around 100 recruitment and employment consultancies in the North of England.

Recruiters in the region reported another sharp reduction in permanent staff appointments during June.

The result extended the current sequence of decline that began when lockdown restrictions were first introduced during March.

However, the rate of contraction was much softer than those registered in April and May. Anecdotal evidence suggested that a number of clients had imposed hiring freezes amid the coronavirus pandemic.

Across the UK as a whole, permanent staff appointments declined for the fourth time in as many months in June. The latest fall was the softest in the current sequence, albeit still marked overall. Across England a drop in permanent placements was registered, with London recording the sharpest decline.

Temporary billings decreased for the fourth month in a row during June.

Though historically marked, the rate of contraction eased for the second month running to reach the softest since March.

The decline was also slower than that seen across the UK as a whole. Recruiters often associated the latest reduction in temp billings with weaker demand for workers.

At the national level, the rate of decline, although still marked, was the slowest since March. The contraction was broad-based and led by London, while the Midlands recorded the softest fall.

Demand for both permanent and temporary staff across the North West continued to deteriorate in June, but rates of decline eased in both cases.
Permanent vacancies fell for the fourth month in a row, and although the pace of contraction was sharper than the UK average, it eased to the slowest since March. Meanwhile, demand for temporary workers fell at a softer rate than at the national level, albeit still markedly overall.

Unsurprisingly, permanent staff availability continued to soar at the end of the second quarter.

In fact, the rate of growth accelerated to the second-sharpest in nearly 23 years of data collection – behind December 2008.

Anecdotal evidence suggested the surge in labour supply was driven by widespread coronavirus-related redundancies.

The availability of permanent candidates across the UK as a whole also rose further, with the rate of expansion the quickest since January 2009.

The North of England recorded the most marked rise, while London saw the slowest increase, albeit one that was still sharp overall.

June data pointed to another sharp increase in temporary staff availability across the North.

Moreover, the rate of expansion accelerated for the fourth month in a row to reach the quickest since May 2009.

When explaining the rise in labour supply, recruiters suggested that many candidates were looking for short-term, temporary positions while furloughed.

The availability of temporary workers also expanded markedly at the national level, with the pace of increase accelerating to the quickest since data collection began in October 1997.

Each of the four monitored English regions registered an increase in temporary labour supply, with the Midlands recording the quickest rise and London the slowest.

Recruiters in the region recorded a sharp decline in permanent starting salaries for the third month in a row during June.

The rate of reduction was slightly quicker than that registered in May, and close to April’s recent record.

Anecdotal evidence suggested that wages were suppressed by a combination of weak demand for staff and rising labour supply.

Across the UK as a whole, salaries awarded to permanent new joiners fell for the third month running during June, with the rate of decline remaining marked, despite easing.

The South of England registered the fastest reduction and the Midlands the slowest.

Remuneration awarded to temporary staff in the North of England continued to fall in June. Though sharp overall, the rate of reduction eased for the first time in the current four-month sequence of decline and was softer than the UK average.

Some recruiters associated the latest decrease in wages to an excess supply of labour.

At the national level, wages awarded to short-term staff fell at the softest rate in the current three-month sequence of deflation, albeit still sharply overall. Across the four monitored English regions, London recorded the most severe drop in temp pay, while the Midlands saw the softest fall.

Jennifer Lee, office senior partner for KPMG in Liverpool, said: “Despite an inevitable further drop in hiring activity for permanent and temporary staff, it is encouraging to see they both fell at softer rates than seen in April and May.

“However, the air of uncertainty around the COVID-19 pandemic will linger – and rebuilding confidence in the region’s jobs market will take time.

“All eyes will be on the Chancellor’s fiscal statement today, with job seekers hoping to see a focus on skills and retraining, while business will welcome further support packages so they can start to ramp up as lockdown eases, and recovery gets under way.”

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