Key points from the October survey:
– Steeper increases in both permanent placements and contract billings
– Starting salary inflation close to September’s recent high
– Steeper decline in candidate supply
Commenting on the latest survey results, James Stewart, Vice Chair at KPMG, said:
“Whilst Brexit may be dampening overall business investment, firms continue to hire new staff at near record rates. With the jobs market so heated, businesses across the country, of all types, are struggling to find work ready staff. Particular pinch points include IT, engineering, nursing and care staff. Some clients tell us they are seeing the worst period of staff availability for 20 years. A four decade low in unemployment and a dwindling supply of EU workers means good candidates are at a premium. Consequently, we’re seeing wages pushed upwards and a trend of canny workers job hopping to secure a pay rise rather than remaining loyal to their existing employers.”
Staff appointments increase at quicker pace…
The number of people placed into permanent jobs in the UK rose at a sharp and accelerated rate in October. Notably, the latest increase was the second-fastest since March. At the same time, billings for contract staff expanded at the quickest pace since May.
…as demand for staff remains robust
Although job vacancies expanded at the softest pace for nearly two years in October, growth of demand for staff remained historically sharp at the start of the fourth quarter.
Starting salary inflation holds close to multi-year high…
Starting salaries continued to rise sharply in October, with the rate of inflation holding close to September’s 41-month record. Hourly pay rates for contract staff also increased markedly, despite the rate of growth edging down to the least marked since March.
…driven by sustained fall in candidate availability
Overall candidate availability declined at the quickest pace for nine months in October. The supply of both permanent workers and contract staff fell at steeper rates compared to September, with the former noting the sharper pace of reduction.
Permanent placements rise sharply in October
As has been the case since August 2016, UK recruitment consultancies signalled an increase in permanent placements during October. Notably, the rate of growth quickened to the second-sharpest since March. Panellists frequently cited strong demand for staff among clients as well as relatively buoyant market conditions as having driven the latest upturn in permanent staff appointments. At the same time, candidate shortages were mentioned
as having dampened the overall rate of growth.
All four English regions monitored by the survey registered steep increases in permanent placements, led by the South of England.
Contract billings growth quickens to five-month high
Billings received from the employment of temporary/ contract workers rose further at the start of the fourth quarter. Moreover, the rate of expansion was the fastest seen since May and elevated by historical standards. A number of recruitment consultancies attributed the rise to robust demand for short-term workers and, in some cases, the inability to secure permanent staff.
The Midlands saw the quickest increase in contract billings in the latest survey period, though sharp rates of growth were also registered elsewhere.
Vacancy growth softens to 23-month low
October survey data signalled a further sharp rise in demand for staff, with the Report on Jobs Vacancies Index posting well above the neutral 50.0 value at 60.3. However, this was down slightly from 60.5 in September and the lowest reading for just under two years.
Vacancies for both permanent and contract staff grew at marginally softer rates compared to the previous month.
Public & private sector vacancies
Demand for staff continued to increase at a quicker pace across the private sector compared to the public sector during October. In the private sector, both permanent and contract staff vacancies rose at softer, but still
sharp, rates. In the public sector, demand for permanent staff increased at a faster pace, but softened for contract workers.
Official Data: UK Job Vacancies
Latest official data from the Office for National Statistics (ONS) indicated that job vacancies increased by 4.4% on an annual basis in the three months to September. Although this was slower than the 5.6% rate of growth seen in the previous three-month period, it nonetheless left the total number of vacancies at a near-record high (832,000).
Vacancies by Sector
Vacancies for permanent staff rose across all ten monitored job categories in October. IT & Computing and Engineering registered the steepest increases in demand, while the slowest (but still marked) rise was seen for Construction staff.
Nursing/Medical/Care topped the rankings in terms of demand for contract workers at the start of the fourth quarter. That said, all other categories also noted higher vacancies for short-term staff.
Overall candidate availability declines at quickest rate for nine months
The overall availability of staff continued to decline across the UK during October, as has been the case in each month since May 2013. Notably, the rate of contraction accelerated to the quickest since January.
October data signalled that permanent staff supply continued to fall at a faster rate than for contract candidates.
Sharper fall in permanent candidate supply
October survey data signalled that permanent candidate numbers declined at a sharper rate across the UK. Furthermore, the pace of reduction quickened to the fastest in nine months. Recruitment consultancies often mentioned that tight labour market conditions and a reluctance among candidates to move jobs amid Brexit-related uncertainty had weighed on staff availability.
Permanent staff supply fell sharply across all four monitored English regions, led by the South of England.
Contract candidate availability deteriorates further
The supply of contract staff continued to contract sharply at the start of the final quarter of 2018. Notably, the latest fall in contract candidate numbers was the steepest seen for just under a year. Recruiters commented on a wide array of skill shortages, including auditors, business analysts, chefs and secretaries.
The sharpest decline in contract labour supply was noted in the Midlands, while the softest was seen in the North of England.
Starting salary inflation remains historically strong
Salaries awarded to newly-placed permanent workers continued to rise sharply in October, according to the latest survey data. Moreover, the rate of pay inflation was only slightly softer than September’s 41-month record. According to anecdotal evidence, firms often had to raise their salary offers in order to attract candidates.
Steep increases in starting pay for permanent workers were seen across all four monitored English regions.
Contract wage growth softens
Average hourly pay rates for contract staff also rose during October. Although the rate of increase eased to a seven-month low, it remained sharp overall. Recruiters commonly stated that higher rates of pay were having to be offered in order to secure workers.
London registered the fastest rise in short-term pay, while the slowest was recorded in the North of England.
Official Data: UK Average Weekly Earnings
Data from the Office for National Statistics signalled that annual growth of employee earnings (including bonuses) strengthened to 2.7% in the three months to August. This marked the quickest rate of growth since the three months to February.
The stronger rate of increase was supported by faster earnings growth across both the public and private sectors (both recording expansions of 2.7%). This represented the strongest increase in public sector pay since late-2012.
Official data point to improving pay trends
– Latest data from the Office for National Statistics highlighted stronger earnings growth across the UK, as tight labour market conditions continued to exert upward pressure on pay.
– Total pay (including bonuses) rose by 2.7% year-on-year in the three months to August, which was among the strongest growth seen for the past three years. Earnings excluding bonuses meanwhile rose 3.1% over the same period, to mark the quickest rate of increase on this measure since January 2009.
– Stronger earnings growth in the UK has been underpinned by tight labour market conditions. Unemployment is historically low, while demand for staff remains robust, with the official measure of job vacancies at a near-record high. Notably, the unemployment rate currently stands at 4.0%; its joint-lowest level since early-1975.
– Improved earnings growth was signalled in advance by the Report on Jobs. The survey has shown that starting salaries and wages have been rising markedly, particularly in the past year, with official data now showing this feeding through to wider pay trends.
About Langley James
Langley James was founded in 1999 by James Toovey, a highly respected recruitment industry professional. James wanted to provide something unique: a bespoke recruitment service which was founded on service excellence. With offices in London and Chester, we are now providing our recruitment services throughout the world and over the last 18 years have worked with some of the most respected companies.
To find out why so many companies turn to Langley James for support in fulfilling their IT recruitment needs, call and speak to one of our specialist consultants today on 0207 788 6600.
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