Sharp contractions in permanent placements and temp billings

Substantial rise in staff supply

Pay pressures ease

Commenting on the latest survey results, Emma Gibson, Office Senior Partner for KPMG Reading said: “The region’s labour market is still largely at a standstill as employers delay investment decisions – including recruitment – until business confidence returns. “Starting salaries are beginning to rise again, as cautious employers carefully recruit essential skills that they cannot do without and are prepared to pay a premium to secure
the best candidates. “Until business confidence improves, prudent employers are focused on retaining staff and upskilling their existing workforce to be in the best shape to seize on growth opportunities as the economy continues to improve.” Neil Carberry, REC Chief Executive, said: “The jobs market looks like it’s on its way back across the UK with clear improvements nationwide. Permanent hiring remains weak in the South, but the rate of decrease eased further from March. The temp market is yet to join the national road to recovery but that may come next month. “There is potential energy stored in the economy, as employers are feeling more confident. Political certainty and falling interest rates should add to lower inflation and help this turn into movement over the course of the rest of the year. REC members report that clients are ready to hire, but hesitant. These numbers suggest that caution may be starting to abate. “Pay growth remains steady, reflecting both settlements made by employers for their staff, but also the substantial National Minimum Wage rise in April. “No attempt to drive growth will succeed without the next government addressing people issues within its first 100 days. This must include reform of the Apprenticeship Levy to cover high-quality, modular training, and a long-term cross-departmental strategy to tackle labour and skills shortages, owned by the Cabinet Office but delivered locally. As the specialists in jobs, recruiters are ready to help, whoever wins on July 4.”

Staff appointments

Recruitment consultancies report on the number of people placed in permanent jobs each month, and their revenues (billings) received from placing people in temporary or contract positions at employers.

Sustained decline in permanent placements

Recruiters based in the South of England registered a drop in permanent staff appointments in May. The rate of decrease, while easing further from March’s recent record, was still rapid overall. According to anecdotal evidence, the latest decrease was attributed to a market slowdown, fewer vacancies, and political uncertainty. Of the three monitored English regions that posted a reduction in permanent placements, the South of England recorded the strongest fall.

Sharper fall in temp billings

A fourth consecutive monthly decline in temp billings was recorded across the South of England in May. The rate of decrease was the most pronounced since July 2020 and sharp overall. Respondents often linked the latest decrease to reduced client activity and the non-renewal of contracts. Other than the South of England, only London recorded a fall in temp billings.

Staff availability

Recruitment consultants are asked to report whether availability of permanent and temporary staff has changed on the previous month.

Growth in permanent staff supply ticks up to six-month high

A rapid and accelerated improvement in the availability of permanent staff was recorded across the South of England in May, thereby stretching the current run of increasing supply to 15 months. The rate of growth quickened for the fourth straight month to the fastest since November
2023, and surpassed the UK-wide average. Surveyed recruiters linked the latest uptick to redundancies and fewer vacancies.

Temp staff availability rises at strongest pace in eight months

Similar to that observed for permanent staff supply, the availability of temp candidates also expanded at a sharp and accelerated pace in May. The uptick was the strongest in eight months and rapid overall. Underscoring the latest rise were widespread reports of layoffs. Of the four monitored English regions, the South of England led the upturn by a notable margin.

Demand for skills

Pay pressures

The recruitment industry survey tracks both the average salaries awarded to people placed in permanent jobs each month, as well as average hourly rates of pay for temp/contract staff.

Modest rise in permanent salaries during May

May survey data signalled a further rise in starting salaries awarded to permanent staff in the South of England, thereby stretching the current run of increase to 39 months. The rising cost of living and skills shortages continued to exert pressures on pay, noted panellists. That said, the rate of permanent salary inflation across the South of England was modest overall and the weakest of the four tracked English regions.

Temp wage inflation cools on the month

Temp wages rose across the South of England during May. Recruiters noted that clients raised their offers to attract skilled workers and keep pay growth in line with the rising cost of living. That said, the rate of temp wage inflation eased on the month and was notably weaker than the
average recorded over the current 42-month sequence of growth. Moreover, the South of England recorded the weakest rise in hourly pay rates of all the four monitored English regions.