Candidate availability increases as hiring activity weakens during February

February saw a sustained and marked drop in permanent staff appointments across the North of England, breaking a three-year sequence of expansion, according to the latest KPMG and REC, UK Report on Jobs: North of England survey.

But the report, which collected data between February 12-23, also highlighted a renewed fall in billings for short-term staff across the region during February.

Concurrently, staff availability picked up in February, with the supply of permanent workers rising at the sharpest rate for six months.

This also coincided with slight falls in both permanent and short-term vacancies.

Although both starting salaries and temp wages rose across the North of England amid competition for highly skilled candidates, rates of pay growth remained among the softest seen over the past three years.

The KPMG and REC, UK Report on Jobs: North of England is compiled by S&P Global from responses to questionnaires sent to around 150 recruitment and employment consultancies in the North of England.

Survey respondents blamed the latest fall in permanent placements on subdued demand conditions and economic uncertainty. Despite easing on the month, the rate of contraction remained historically sharp.

That said, the downturn recorded in the North of England was less pronounced than that seen at the UK level.

Recruitment agencies in the North of England registered a drop in temp billings for the first time in four months in February. According to anecdotal evidence, demand for temporary workers had deteriorated. Overall, the reduction was the joint quickest seen since June 2020.

Of the four monitored English regions, only London recorded a faster decline in temp billings, while the Midlands bucked the wider UK trend and recorded a modest increase.

February survey data indicated another uplift in starting salaries across the North of England, thereby extending the current sequence of inflation to three years. Higher salaries often reflected attempts to attract suitably skilled staff, according to anecdotal evidence.

The rate of inflation improved to a four-month high and was sharp but remained just below the historic average.

On a regional basis, the North of England recorded the quickest rise in starting salaries of all four monitored English areas.

Adjusted for seasonal factors, the Temporary Wages Index recorded above the 50.0 no-change mark in February, to signal the third successive monthly rise in temp pay across the North of England. The latest uptick was the fastest in four months and solid overall.

Furthermore, the North of England signalled the strongest rate of temp wage inflation of all four English regions monitored by the survey.

Chris Stott, Manchester Office Senior Partner for KPMG in the UK, said: “Economic uncertainty and subdued demand is still impacting hiring conditions across the North of England, with permanent vacancies falling again.

“The increase in temp billings we saw in previous months was indicative of businesses wanting to be flexible on cost base, however, demand for workers in February meant that we saw a fall for the first time in four months suggesting businesses are waiting to fulfil their hiring plans.”

He added: “We are seeing workers looking for permanent positions as it offers them greater security, but there aren’t enough vacancies available as businesses want greater certainty to be able to confidently pick up hiring activity. For hiring activity to pick up consistently again, we’ll need to see a strengthened market and economic stability.”

Neil Carberry, REC chief executive, said: “As inflation is falling back to target earlier than expected, it’s time to get the focus on growth. This month’s survey shows the market slowing, and recruitment agencies registering a drop in temp billings for the first time in four months in the North. In saying that, there is a notable demand for people to fill accounting, finance and blue-collar roles in the North.”

He added: “Following the Budget last week, which didn’t address some of the key drivers of growth like skills, infrastructure and reducing the cost of investment and employment, all eyes are on the Bank now. Lower interest rates will help build firm’s confidence to invest.”