KPMG / REC Jobs report: Oct 2023

  • Permanent placements declined at the weakest rate in three months
  • Temp billings return to growth
  • Pay pressures ease as staff supply continues to increase

The Report on Jobs is unique in providing the most comprehensive guide to the UK labour market, drawing on original survey data provided by recruitment consultancies and employers to provide the first indication each month of labour market trends. The main findings for September are:

A Downturn in permanent staff hiring eases, temp billings rise Recruitment consultancies across the UK signalled a softer, but still solid decline in permanent staff appointments during September. According to panellists, companies remained hesitant to commit to new permanent hires due to ongoing economic uncertainty and efforts to control costs. A preference for short-term
staff meanwhile supported a fresh rise in temp billings at the end of the third quarter.

Softer increases in starting pay… September survey data pointed to a further easing of overall pay growth across the UK. Though sharp, the rate of starting salary inflation edged down to a two and- a-half-year low, while temp wages increased at the slowest rate in 31 months. While competition for skilled workers and the higher cost of living continued
to place upward pressure on pay, there were some reports of greater strain on clients’ budgets.

…amid further improvement in candidate availability  The overall availability of candidates improved again in September. Although the
pace of expansion softened further from July’s recent high, both permanent and temporary labour supply increased at historically strong rates. Anecdotal evidence
generally linked the latest upturn to redundancies and a slowdown in market conditions.

Overall vacancies fell slightly in September Total vacancies slipped into contraction territory in September, marking the first
fall in overall demand for staff since February 2021. The rate of contraction was only marginal, however. Underlying data revealed a fresh reduction in permanent
vacancies, albeit one that was slight, while growth of demand for temp staff moderated to a four-month low.

Claire Warnes, Partner, Skills and Productivity at KPMG UK, said:
“A concerning feature of this month’s data is that demand for staff is losing momentum, with total vacancies falling for the first time since February 2021 amid a fresh reduction in permanent vacancies. While both reductions are slight, employers are clearly nervous due to the long-term economic uncertainty and budget constraints that are impacting businesses everywhere. This in turn is leading to a continued reliance on temporary staff. “For several months, strong pay growth has been a consequence of a tight labour market. But strains on employers’ budgets are now affecting the rate of starting salary inflation which is at a two-and-a-half-year low, while temporary wages increased at the slowest rate in 31 months. “Skill shortages across a range of sectors – from permanent IT staff to temporary nursing roles – also continue to be an area of long-term concern for the economy.

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