Northern jobs market sees fall in permanent roles, while temporary billings pick up

Chris Stott

Recruitment levels for permanent roles continued to decline across the North West last month, while temporary billings showed renewed growth following three straight months of decline.

These are the findings of the latest KPMG and REC, UK Report on Jobs: North of England survey for May.

Meanwhile, vacancies for both types of roles rose again last month.

Despite an increase in staff availability, starting salaries and temp pay rates both picked up as firms looked to attract suitably-skilled workers.

The report is compiled by S&P Global from responses to questionnaires sent to around 150 recruitment and employment consultancies in the North of England.

Recruiters across the North of England signalled a further reduction in the number of staff placed into permanent roles, thereby extending the current sequence of contraction to just shy of a year.

The rate of decline was solid and largely consistent with April. Panelists reportedly linked the fall to a drop in demand for permanent staff. The reduction in the North of England was the second most marked of the monitored English regions, only slower than the South of England.

The seasonally adjusted Temporary Billings Index posted above the neutral 50.0 mark for the first time in four months in May, to signal a rise in the number of staff placed into temporary roles across the North of England.

Recruiters noted that demand for temporary staff had increased following new contract wins and the start of new projects. Locally, the growth rate was moderate, but nevertheless the most pronounced of the four monitored English regions.

Recruiters across the North of England pointed to a rise in the number of job openings for permanent roles for the third month running in May. The rate of increase picked up again to the sharpest for nine months. Though the strongest of the four monitored English regions, the uptick was, nevertheless, subdued by historical standards.

For a second successive month, the North of England recorded a rise in the number of temp vacancies. Vacancy growth cooled and was only marginal, but contrasted with vacancy stagnation at the UK level.

May survey data also highlighted a fifth consecutive monthly increase in the availability of permanent staff across the North of England. Supply grew at a substantial pace that was the quickest for nine months and notably elevated compared with the long-run series trend. Recruiters often noted that candidate confidence had increased. The South of England was the only monitored region to record a quicker rise than the North.

In line with the picture for permanent candidates, the availability of temp staff increased further and at an accelerated rate midway through the second quarter. As well as steep, temp staff supply growth was at its most pronounced for 10 months. Panelists suggested that there was increased willingness among candidates to accept temp roles due to redundancies and the current economic climate. The rise in temporary staff availability was, however, slower than that see at the UK level.

As has been the case in each month since early 2021, recruiters across the North of England continued to report starting salary growth in May.

Some panel members noted higher starting salaries were offered to attract skilled candidates, while others linked the uplift to the seniority of the roles recruited. As well as robust, the pace of increase in the North of England posted a nine-month high and was the sharpest of the four monitored English regions.

Hourly pay awarded to new temporary joiners rose again midway through the second quarter, thereby stretching the current sequence of growth to six months.

The rate of inflation in temp wages was the strongest for a year and substantial overall. Hourly pay rates were reportedly lifted in line with permanent salary growth to ensure pay parity. Regionally, the North of England registered the sharpest rise in hourly pay for temporary staff in May.

Chris Stott, Office Senior Partner for Manchester at KPMG UK, said: “The Report on Jobs data for the North from May highlights the complexities in the current labour market, with placements for permanent staff falling again and continued upward pressure on pay amongst competition for candidates with the right skills.

“With expected rate cuts, inflation easing and increased consumer confidence over the summer, we’d hope that the prospect of a better economic outlook for the rest of the year will boost business confidence. Alongside this, business leaders in the North will be watching the General Election closely as they consider their plans for growth.”

REC Chief Executive, Neil Carberry, said: “The jobs market looks like it’s on its way back across the UK, with clear improvements over last month on most key measures in the North.

“Recruiters are noticing that candidates are more confident to put themselves forward now in the North and an increased willingness among candidates to accept temp roles in the region.”

He added: “There is potential energy stored in the economy, as employers are feeling more confident. Political certainty and falling interest rates should add to lower inflation and help this turn into movement over the course of the rest of the year. REC members report that clients are ready to hire, but hesitant. These numbers suggest that caution may be starting to abate.

“Pay growth remains strong, reflecting both settlements made by employers for their staff, but also the substantial National Minimum Wage rise in April.”

He said: “No attempt to drive growth will succeed without the next government addressing people issues within its first 100 days. This must include reform of the Apprenticeship Levy to cover high quality, modular training, and a long term cross-departmental strategy to tackle labour and skills shortages, owned by the Cabinet Office but delivered locally. As the specialists in jobs, recruiters are ready to help, whoever wins on July 4.”