Hiring activity has fallen across the South West

Weak employer confidence amid a subdued economic climate drove a reduction in hiring activity across the South West in November.

According to the latest KPMG and REC, UK Report on Jobs survey  permanent staff appointments fell to the greatest extent since July, while temp billings fell back into contraction after a marginal rise in October.

The slowdown in recruitment activity and reports of redundancies drove further marked upturns in candidate availability, most notably for those seeking permanent roles.

Demand for staff was meanwhile muted, with permanent vacancies dropping again and temporary job opportunities up only slightly on the month. After marked growth in recent years, rates of starting pay inflation continued to recede in November, with salaries and wages expanding only modestly.

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

David Williams, office senior partner at KPMG in Bristol, said: “The latest findings reflect the ongoing cautious approach of many businesses across the South when it comes to taking on permanent hires, something that shows little sign of easing. With 2024 around the corner, hopefully the economic uncertainty that has clouded much of this year will continue to lift and have a positive knock-on effect for the region’s jobs market.

“While many employers here are putting the brakes on hiring activity, the number of job seekers, especially those seeking long-term positions, is surging at the quickest rate seen in three years and faster than anywhere else in the UK, which could lead to candidates facing heightened competition.”

Recruiters operating in the South West reported a further decline in permanent staff appointments in November, thereby extending the current sequence of reduction to eight months. Furthermore, the latest drop was the second-steepest since June 2020 and rapid overall. Panel members frequently commented that reduced confidence around the economic outlook had led employers to delay or cut back on recruitment.

On a regional basis, only London recorded a sharper drop in permanent placements in November. The Midlands bucked the wider UK trend and saw a mild increase.

November survey data pointed to a fresh reduction in temp billings across the South of England. Billings have now declined in four of the past five months, with the latest contraction the most pronounced since July 2020. According to survey respondents, fewer projects at clients and subdued demand for staff weighed on billings in the latest survey period.

A renewed drop in temp billings was also seen at the national level, albeit one that was modest overall. While London likewise noted a fall in billings, slight increases were seen in the Midlands and the North of England.

The number of permanent job opportunities in the South West fell for the fourth successive month in November. Though modest, the rate of reduction was the quickest seen in just over three years and outpaced the UK-wide average.

After falling slightly in October, the number of temporary staff vacancies in the South West rose fractionally in November. Notably, the rate of expansion was the weakest of all four monitored English regions.

Recruitment consultancies in the South West signalled a sharp and accelerated rise in the availability of permanent staff in November. Moreover, the latest upturn was the fastest recorded since December 2020. It was also the quickest upturn in permanent staff supply seen of all four monitored English regions. There were widespread reports that a slowdown in hiring, staff redundancies and workers seeking better paid roles drove the latest expansion.

All four monitored English regions registered sharp and accelerated increases in permanent labour availability midway through the final quarter.

Although declining for the second straight month, the seasonally adjusted Temporary Staff Availability Index still signalled a rapid rise in temp candidate numbers across the South West during November. Company layoffs and fewer job opportunities were linked to the latest rise in temp staff supply.

In contrast, an accelerated upturn in temp candidate availability was seen at the national level, and one that outpaced that seen in the South West. The North of England recorded the softest rate of growth of the four English regions monitored by the survey.

November survey data pointed to a further easing in the rate of starting salary inflation across the South West. Permanent starters’ pay rose at a modest pace that was the slowest recorded over the current 33-month sequence of growth. While some employers were willing to raise pay offers to secure skilled candidates, there were reports of clients imposing stricter budgets after a strong period of growth.

The South West recorded the slowest rise in starting salaries of all four monitored English regions for the fourth month in a row.

As has been the case since December 2020, average hourly pay rates for short-term staff in the South West increased during November. That said, the rate of wage inflation was among the weakest seen over this period and only modest.

Neil Carberry, chief executive of the REC, said: “2023 has been a testing year in our labour market, with permanent hiring dropping and temporary hiring flat or growing only a little. That’s the story again in this month’s data, though the market is quieter overall as firms start to move activity into 2024 rather than pressing ahead now.

“Anecdote from REC members supports our client survey finding that employers are considering coming back to the market, but that in many cases the activity will be next year. So, while these figures represent a further slowdown in current hiring conditions, recruiters are more positive about the new year.

“The South of England saw the quickest upturn in permanent staff supply seen in England. Company layoffs and fewer job opportunities were linked to the latest rise in temp staff supply. While some employers were willing to raise pay offers to secure skilled candidates, we are hearing of clients imposing stricter budgets after a strong period of growth.

“For policy makers, any return to growth will put strain on a labour market with embedded shortages – this week’s pro-election rather than pro-economy decision on immigration will exacerbate that. Any return to growth could drive domestically-generated inflation unless we adopt a proper plan for workforce capacity, embracing better welfare-to-work support, finally reforming the Apprenticeship Levy, funding Further Education properly and the kind of support for school leavers suggested by today’s Broken Ladders report from EDSK and REED on the school-to-work transition.”