The June report found that permanent placement growth had weakened to a 16-month low in June with a notable slowdown in permanent placement growth as vacancies expand at softest rate for over a year.
The report, compiled by S&P Global found that candidate shortages continued to limit hiring activity, but slower decision-making amid greater economic uncertainty also dampened growth. At the same time, overall demand for workers increased at the slowest rate since March 2021.
On top of that, availability of staff continued to deteriorate rapidly, with the rate of decline the quickest for three months. Efforts to attract and secure candidates led to further marked increases in starting pay, though rates of salary and wage inflation softened slightly since May.
Recruitment activity continued to expand across the UK during June, with temp billings rising to a greater extent than permanent placements. Notably, permanent staff appointments increased at the slowest rate for 16 months, which was blamed on a combination of candidate shortages and slower decision-making at clients amid greater uncertainty around the outlook and rising costs.
Although overall vacancies continued to rise at a historically sharp pace in June, the latest upturn was the least marked for 15 months. Softer rises in demand were signalled for both permanent and temporary workers at the end of the second quarter, with the former noting the quicker rate of expansion.
The availability of staff continued to decline at a severe pace in June. Furthermore, the pace of deterioration quickened to the sharpest for three months, with both permanent and temporary labour supply falling at faster rates. Recruitment consultancies often attributed lower candidate numbers to a generally low unemployment rate, fewer foreign workers, robust demand for staff and hesitancy to switch roles in the increasingly uncertain economic climate.
The ongoing imbalance between the supply and demand for workers drove further steep increases in rates of starting pay during June. Though sharp and well above the series average, the rate of starting salary inflation eased to the softest since August 2021, while temp wage growth edged down to a 12-month low.
All four monitored English regions noted softer rises in permanent placements, with the North of England seeing the weakest upturn overall that was only fractional.
London saw the sharpest increase in temp billings at the end of the second quarter, while the softest expansion was registered in the Midlands.
The strongest increase in vacancies was signalled for permanent workers in the private sector, followed by permanent staff in the public sector. This was despite the former seeing a notable slowdown in the rate growth compared to May. The softest, but still marked, rise in vacancies was seen for temporary workers in the public sector.
June survey data signalled steep increases in permanent staff demand across all 10 monitored employment categories. Hotel & catering saw the sharpest upturn in vacancies overall, followed by IT & computing and nursing/medical/care.
Recruiters signalled higher temp vacancies in nine of the 10monitored job categories at the end of the second quarter. Hotel & catering topped the rankings, while retail was the only sector to note reduced demand. That said, the rate of contraction was only modest.
Claire Warnes, head of education, skills and productivity at KPMG UK, said the apparent buoyancy of the jobs market overall continues to mask some increasingly concerning trends.
“Firstly, the fluctuations in demand for permanent and temporary workers in some sectors may be showing a sustained downward trend, as it becomes clear that current economic pressures are impacting employers’ confidence to grow,” she said.
“Secondly, the supply of candidates in all sectors continues to decline, with the rate of contraction accelerating to the quickest for three months in June. Added to that, competition for candidates pervades all sectors with employers offering financial incentives to retain talent, so increasing wage inflation. This latest data could be signalling that the UK jobs market may be more fragile than it seems.”
