Recruitment activity across the South of England continued to fall in July amid reports of weak business confidence and concerns over costs, according to the latest KPMG and REC, UK Report on Jobs: South of England survey, compiled by S&P Global.
The decline in permanent placements was rapid, despite easing since June, while temp billings fell at a softer, but solid pace.
The reduction in hiring coincided with steep and accelerated falls in demand for staff, which alongside reports of redundancies, drove further marked increases in candidate availability for both permanent and short-term roles.
Tighter recruitment budgets and weaker demand for workers. Meanwhile, placed downward pressure on pay, with starting salaries rising only slightly and temp wages falling for the first time since January.
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.
Steve Hickman, Reading office senior partner at KPMG UK, said: “Although the decline in permanent placements in the South eased slightly in July, the region is still facing significant pressure, recording the sharpest drop in demand for both permanent and temporary staff across the UK.
“Ongoing employer caution driven by rising costs and weaker demand continues to weigh on hiring activity.
“At the same time, more people are entering the jobs market, mainly due to redundancies, which means businesses in the South East have access to a wider pool of talent.
“And with pay pressures easing, especially for temporary roles, there’s a window of opportunity for companies to bring in the right people at a more manageable cost.”
July sees softer but still sharp drop in permanent placements
The number of people placed into permanent jobs across the South of England declined for the twenty-eighth month in a row in July. Although the rate of contraction was the weakest in three months, it remained rapid overall and was the sharpest of all four monitored English regions.
According to recruiters, placements fell due to weaker demand for staff, which in turn reflected low market confidence and increased employer costs (linked to higher national insurance contributions and minimum wage rates).
Recruitment consultancies across the South of England signalled a sustained reduction in temp billings during July. Though solid, the rate of decline was the softest seen since last November.
The South also recorded the weakest reduction in billings of all four monitored English areas. The latest fall was often linked by recruiters to budget constraints and lower workplace activity at clients.
Permanent vacancies continued to decline across the South of England in July, with the rate of contraction the sharpest in three months. Demand for temporary workers in the region also fell at a marked rate that was the steepest since April.
Notably, the South of England has recorded the most pronounced drops in demand for both types of staff of all four monitored English areas for the past four months.
Upturn in permanent staff supply eases but remains marked
Recruitment consultancies in the South of England registered a further improvement in permanent candidate numbers in July. Although easing from June’s post-pandemic record, the rate of expansion remained rapid overall.
According to panel members, redundancies and concerns over current job security pushed up candidate availability.
Though marked, the increase in the South of England was softer than that seen across the three other monitored English areas. The North of England recorded the steepest upturn in permanent labour supply.
Adjusted for seasonal factors, the Temporary Staff Availability Index posted comfortably above the neutral 50.0 level to signal a steep increase in temp labour supply across the South of England in July.
This was despite the rate of growth easing to a four-month low. Company layoffs and fewer contract opportunities were reportedly behind the latest increase in temp candidate numbers.
That said, the rate of improvement was not as pronounced as that seen at the national level. On a regional basis, the quickest rise in temp worker availability was seen in the North of England.
Starting salary inflation hits five-month low
July survey data pointed to a further slowdown in the rate of starting salary inflation across the South of England. Notably, the rate of growth was the slowest seen over the current five-month sequence and only marginal.
Tighter recruitment budgets and improved candidate numbers had weighed on salary growth, according to survey members.
The South of England recorded the weakest increase in starting salaries of all four monitored English areas. Pay growth at the UK level eased to the weakest in nearly four-and-a-half years.
The seasonally adjusted Temporary Wages Index fell below the neutral 50.0 threshold to signal a fresh fall in pay for short-term staff across the South of England in July. Panel members frequently mentioned that reduced demand for staff and greater candidate availability had placed downward pressure on temp pay.
Though modest, the decline contrasted with a marginal increase in wages at the UK level. London registered the strongest rise in temp pay, though growth remained weaker than the historical trend.
Kate Shoesmith, REC deputy chief executive, said: “There is a path to jobs market recovery, but it will take coordinated action from government, the Bank of England and business to maximise on any potential upswing.
“With a further slowdown in the rate of starting salaries, and temp pay falling for the first time since January in the South of England, it was right to cut interest rates last week.
“More action like this, to stabilise the business cost-base, is what will support growth and boost the jobs market this year. That is what the Chancellor should be keeping firmly in mind when preparing this year’s Autumn Budget.
“Fluctuations in permanent and especially in temporary job placements in the South of England signal a labour market that remains resilient but uneven.
“Across the UK, construction, a key economic bellwether, has seen a rise in temp vacancies, an early sign of confidence returning. Demand for blue-collar temp roles and permanent engineering jobs in the UK also remains steady, offering another glimmer of optimism.
“At the same time, hiring in retail and hospitality is down across the UK. Employers in these sectors are pausing due to cost pressures and uncertainty around employment law, although when the turn comes, these industries typically rebound quickly.
“Meanwhile, widespread skills shortages remain in the South of England, which indicates the need for urgent support from government to upskill and retrain people; while businesses need to act now to secure the talent they will require when hiring picks up later this year, as our separate employer sentiment surveys suggest it will.”
