Recruiters across the South of England signalled further falls in both permanent placements and temp billings during September, according to the latest KPMG and REC, UK Report on Jobs: South of England survey, compiled by S&P Global.
Caution around the outlook and strain on budgets drove the latest drop in hiring activity, according to panellists. Furthermore, permanent vacancies fell for the second month running, while growth of demand for short-term workers softened.
Turning to pay, rates of starting salary inflation and temp wage growth continued to ease in September. The softer increases in pay occurred alongside further improvements in candidate availability, with temp labour supply rising at a particularly rapid pace.
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.
Emma Gibson, Office Senior Partner at KPMG in Reading, said: “The latest survey highlights that demand for permanent staff in the South is falling and weaker than in other regions in the UK, while part-time vacancies rose at the slowest rate in four months.
“This ongoing hesitancy among employers will partly be the result of the long-term economic uncertainty and budget constraints that are impacting businesses everywhere.
“It will be interesting to see whether these trends persist or if the recent slight calming of inflation rates positively impacts the outlook for both employers and jobseekers in the coming months.”
Softer but still sharp decline in permanent placements
Recruitment consultancies based in the South of England registered a further substantial decline in permanent staff appointments during September. This was despite the rate of contraction easing to the softest in three months.
Anecdotal evidence indicated that rising costs and uncertainty over the economic outlook were the main factors that dampened permanent staff hiring.
The South of England recorded the quickest drop in permanent placements of all four monitored English regions.
Temp billings received by recruiters in the South of England fell for the third straight month in September. Whilst modest, the rate of contraction was the most pronounced since July 2020.
The latest reduction was driven by softer market conditions and pressure on clients’ budgets, according to panel members.
The South of England bucked the wider trend as billings increased across the three other monitored English regions, with London seeing the steepest rate of growth.
Demand for permanent workers in the South of England weakened for the second month running in September. Though modest, the rate of decline was the fastest since October 2020 and quicker than the UK-wide trend.
September survey data signalled a further slowdown in temporary vacancy growth across the South of England. The latest uptick in demand for temp staff was the weakest in four months and slower than the national average.
Permanent labour supply rises at softest pace for four months
As has been the case since March, the availability of permanent staff across the South of England improved during September.
Though solid, the rate of expansion softened for the second month in a row and was the weakest since May. The increase was also the slowest of all four monitored English regions.
When explaining the latest rise in permanent staff supply, recruiters often mentioned this was due to company layoffs and reduced demand.
Of the four monitored English areas, the sharpest increase in permanent candidate numbers was seen in the North of England.
The upturn in temporary candidate numbers across the South of England gathered pace during September. Notably, the rate of growth was the sharpest recorded since November 2020 and was the steepest of all four monitored English regions by a wide margin.
Recruiters in the region often commented that the availability of short-term staff had increased due to lower activity at clients and a lack of new projects.
Starting salary inflation edges down to a 30-month low
Average starting salaries for permanent workers across the South of England increased further in September. Higher salaries were often linked to competition for suitably skilled staff.
That said, the rate of inflation was the slowest since the current period of rising pay began in March 2021 and below the long-run average.
The South of England also saw the softest rise in starting salaries of all four monitored English regions for the second month in a row. The steepest increase in permanent pay was recorded in London.
The seasonally adjusted Temporary Wages Index signalled only a modest increase in temp pay across the South of England at the end of the third quarter.
Furthermore, the rate of inflation was the slowest seen in just over two-and-a-half years and weaker than the UK-wide trend.
Where higher hourly rates of pay were reported, this was often attributed to a lack of suitably skilled candidates and higher living costs.
On a regional basis, the North of England saw the weakest rate of hourly wage growth, while the sharpest was reported in London.
Neil Carberry, chief executive of the REC, said: “Employers tell us they are feeling better about themselves as the year moves on, and today’s data does suggest the possibility of a turnaround in hiring over the next few months.
“Permanent placements have been falling for most of the past year now from abnormal post-pandemic highs.
“While permanent hiring activity continues to slow in the South, the pace of contraction eased to the softest in three months. At the same time, temporary hiring has experienced only a mild slowdown in the past few months.
“This feels like a market that is finding the bottom of a year-long slowdown. And the relative buoyancy of the private sector is likely to be driving this more positive outlook.
“Some sectors such as accounting/financial, blue collar, hospitality, engineering and healthcare continue to experience strong demand. Along with high inflation, this is likely to be contributing to the growth of pay for temps and perms alike.
“As we move towards the Autumn Statement, action to help people find high-quality roles is essential as the picture varies so widely from sector to sector.
“The REC would like to see a focus on skills, finally reforming the system to deliver a mix of high-quality courses within the levy framework, and action to tackle inactivity – like extending the Restart programme which has helped recruiters place thousands of long-term unemployed people into work.
“Both of these could form part of a long-overdue people and growth strategy. From reforming government procurement to better and more effective regulation, there is a lot government could do in partnership with recruiters to drive growth and prosperity.”