Jobs: Permanent placements decline at quickest rate for nearly three years

Hiring trends continued to diverge across the South West in May, as uncertainty over the outlook led to hesitancy to commit to permanent workers, which drove the quickest drop in permanent placements for nearly three years.

In contrast, temp billings continued to rise strongly, according to the latest KPMG and REC, UK Report on Jobs survey, compiled by S&P Global.

Vacancies for both permanent and temporary workers across the region meanwhile expanded at historically slow rates. At the same time, redundancies and workers seeking higher paid roles led to the strongest increase in permanent labour supply since the start of 2021 and a fresh rise in temp candidate availability.

Starting rates of pay continued to increase markedly in May as firms competed for skilled workers. That said, rates of pay growth remained far slower than seen on average during the past two years.

Recruiters based in the South West signalled back-to-back declines in permanent placements during May. The rate of contraction quickened notably on the month and was the sharpest since June 2020. Weaker confidence in the outlook had impacted staff hiring, according to panellists. There were also reports that shortages of skilled candidates had dampened recruitment.

London saw the steepest decline in permanent placements of the four English areas monitored by the survey, albeit one that was only fractionally faster than that seen in the South West.

Billings received from the employment of temporary staff in the South West increased for the thirty-fourth month running in May. The rate of expansion softened since April but was nevertheless strong overall. Recruitment consultancies often commented that a preference for temp staff to fill open roles had helped to drive the latest upturn in billings.

On a regional basis, the only other English area to record higher temp billings was London.

Demand for permanent staff across the South West continued to rise in May, and at a solid pace that was slightly quicker than the UK-wide trend. That said, the rate of expansion slipped to a four-month low and remained below the historical average.

At the same time, a notable slowdown in temp vacancy growth was seen across the region, with demand for short-term staff rising marginally overall. A similar trend was seen across the UK as a whole.

The availability of permanent workers in the South West increased for the third consecutive month in May. Furthermore, the rate of expansion was the quickest recorded since January 2021 and solid overall. That said, the upturn was softer than those seen across the three other monitored English regions.

Higher permanent labour supply was often linked to redundancies, but also workers seeking more stable or better paid roles.

After falling in each of the prior 26 months, the number of candidates available for temporary positions in the South West rose during May. Reports from panel members indicated that a slowdown in activity at clients and workers seeking better paid roles had driven the fresh upturn in supply. That said, the rate of improvement was mild overall and weaker than the UK-wide average.

The steepest increase in temp candidate availability was seen in London, and the softest in the Midlands.

Adjusted for seasonal variance, the Permanent Salaries Index pointed to a further increase in starting salaries for permanent staff across the South West during May. Recruiters suggested that efforts to attract and secure suitably skilled candidates had driven the latest rise in permanent pay. Though strong, the rate of inflation softened from April’s five-month high and was the slowest seen since March 2021.

Starting salaries increased sharply across all four monitored English regions midway through the second quarter, with the fastest rate of inflation seen in the North of England.

May survey data signalled a renewed acceleration in the rate of temp pay growth across the South West. The pace of inflation was the steepest seen for three months and broadly in line with the UK-wide trend. Higher hourly wage rates were often attributed to the increased cost of living but also a result of negotiations with skilled candidates.

Of the four English regions monitored by the survey, the steepest increase in temp pay was seen in the North of England. London meanwhile saw the softest rate of wage growth.