Brexit-related uncertainty is continuing to hold back hiring trends according to the latest KPMG and REC, UK Report on Jobs. Permanent staff appointments fell at a slightly quicker pace than in April, while temp billings expanded at the slowest rate for over six years. At the same time, subdued confidence impacted on both the demand and supply of labour, with vacancy growth staying close to a multi-year low and staff availability declining further.
The report, which is compiled by IHS Markit from responses to questionnaires sent to a panel of around 400 UK recruitment and employment consultancies, indicated that permanent placements declined for the fourth time in the past five months during May. At the same time, billings received from the employment of short-term workers rose only marginally.
The number of people placed into permanent job roles fell for the fourth time in the past five months in May, and at a quicker pace than in April. At the same time, temp billings expanded only marginally, with growth hitting a 73-month low. There were many reports that hiring activity was dampened by uncertainty, but also mentions that demand for staff had weakened compared to earlier in the year.
Recruitment agencies signalled a slightly stronger rise in overall vacancies during May, but growth remained close to April’s 80-month low. Although both permanent and temporary job openings rose solidly, rates of increase remained notably weaker than their historical averages.
Ongoing Brexit-related uncertainty and generally tight labour market conditions were cited as key factors weighing on candidate availability during May. Furthermore, both permanent and temporary staff supply declined at faster rates than in April. Although salaries awarded to permanent starters continued to grow sharply in May, the rate of inflation was the least marked for just over two years. In contrast, temp wages increased at the quickest pace for six months. Panellists commonly stated that competition for scarce workers continued to place upward pressure on pay.
“Brexit uncertainty continues to dampen the jobs market as companies kept their recruitment decisions on hold in May,” said James Stewart, Vice Chair at KPMG. “Permanent staff appointments fell at a slightly faster pace than in April, while subdued confidence ensured that growth in temporary billings hit a six-year low.
“We expect the labour market to remain in stalemate over the summer as the contest for a new Prime Minister kicks off,” he added. “Companies are unlikely to make any dramatic investment decisions until a new leader is in place and have more insight on the future direction of Brexit.”
Neil Carberry, Recruitment & Employment Confederation chief executive, said: “The jobs market is still creating opportunities for those looking for work. With vacancies rising and starting salaries going up sharply, it is worth people talking to recruiters about that next step in their career. Sectors like IT, engineering and healthcare are hiring strongly, while the North of England showed the best performance in terms of regions.
“Overall, though, the survey again shows what uncertainty does to hiring plans. Total permanent placements fell again this month while temporary billings grew only marginally. Recruiters are reporting that demand for staff is slowing and their clients are reducing business activity on average. Worryingly, these trends are most pronounced in key sectors like retail and construction.”