Job market ‘waiting for a signal’ as recruitment numbers fall

A downturn in recruitment rates has accelerated in the last quarter of 2024 according to a survey of 150 recruitment and employment consultancies in the North of England, a reflection of a drop in confidence amongst employers according to recruiters trade body the REC.

The KPMG and REC, UK Report on Jobs: North of England is compiled by S&P Global found the quickest fall in permanent staff appointments for three months.

The number of staff placed into permanent roles fell markedly across the North of England in September. The latest drop in permanent staff appointments was the fifteenth in successive months, as well as the quickest across the third quarter. Recruiters often blamed the downturn on slower vacancy growth for permanent roles. The downturn was widespread at the national level, with all four monitored regions signalling a drop in permanent staff appointments. The decline in the North of England was largely in line with the UK average.

For the first time in five months, recruiters in the North of England signalled a fall in temporary billings during September. Moreover, the pace of decline was moderate and the fastest seen since March. According to anecdotal evidence, the decrease in billings for short-term staff reflected the non-replacement of leavers. Excluding the Midlands, where an increase in temp billings was recorded, the North of England posted the softest decline of the English regions that saw a fall.

There was an increase in the number of permanent job openings across the North of England in September, albeit one that was only marginal. Vacancy growth also slowed for the fourth month in a row. Nevertheless, the North was the only monitored English region to record an uplift.

September data pointed to a drop in temp vacancies across the North of England, thereby ending a five-month run of growth. Though only marginal and the slowest of the monitored regions, the local decline in job openings was the quickest seen in just over four years.

Neil Carberry, REC Chief Executive, said: “This is a picture of a jobs market waiting for a signal. Recruiters report that projects in client businesses are ready to go, but confidence is not yet high enough to push the button.

“The temporary hiring market was more resilient than the permanent hiring market in the North, with the fall in temp billings in the region marginal and the first for five months.

“There was a gentle uplift in starting salaries in the North and the region bucked the UK trend to record a rise in temp pay. That said, pay continues to moderate when looked at across the country and is now below its long-term trend. This should add to the willingness of the Bank to become more activist on interest rate cuts, as the Governor hinted last week. This would be a big boost to business.

“But eyes are also on the government. The Chancellor has a huge opportunity at the Budget to drive confidence in our economy. Firms want a clear industrial strategy that goes beyond a sector-by-sector approach, focusing on key growth enablers such as the workforce, infrastructure, access to capital, and the tax system. They also need clarity on the changes to employment law that are planned – as uncertainty in this area is also slowing employer confidence right now.”

However, salaries awarded to new permanent joiners in the North of England continued to rise in September.

According to surveyed recruiters, there was a general uplift in starting salaries across the region. That said, salary growth slowed notably on the month to the least pronounced in three-and-a-half years and was only marginal overall.

Of the four monitored English regions, the rise in pay was the slowest in the North of England.

Short-term staff in the North of England saw hourly pay rates rise for a tenth successive month in September. Moreover, the rate of temp pay inflation picked up slightly from that seen in August and was moderate overall. The North of England was the only monitored English region to register an uplift in temp pay in September, though declines in the Midlands and the South of England were only fractional.

Chris Stott, Manchester Office Senior Partner at KPMG UK said: “Hiring slowed in the North in September and included a temporary employment fall for the first time in five months.  Despite a growing pool of available candidates due to a slowing market and increased redundancies, some businesses looking to hire are still struggling to find people with the skills they need. The slowdown in hiring may also have been exacerbated by companies awaiting clarity about how the Budget and related policy will impact their business.”