The latest KPMG and REC UK Report on Jobs survey, compiled by S&P Global has shown how uncertainty over the business outlook and budget constraints led companies to reduce their hiring activity again in June. According to the data, permanent staff appointments fell at the steepest rate for nearly two years, while the downturn in temp billings also gathered pace. At the same time, overall vacancies continued to fall, particularly for permanent positions.
Recruiters also signalled a rapid upturn in overall candidate availability, which increased at the sharpest pace since November 2020, amid reports of redundancies and reduced appetite for staff. Improved labour supply, tighter budgets and lower demand for workers dampened pay growth in June, with starting salaries and temp wages increasing only modestly overall.
The latest survey of recruitment consultancies signalled an accelerated decline in hiring activity across the UK at the end of the second quarter. Permanent staff appointments fell at a substantial pace that was the quickest in nearly two years, while temp billings decreased at the fastest rate since February. There were widespread reports that companies had pulled back on hiring due to reduced confidence around the outlook and worries over costs.
At the same time, the overall availability of staff increased rapidly in June amid reports of redundancies and weaker demand for workers. While the supply of permanent labour expanded at a slightly faster rate than that seen for temporary candidates, in each case the rate of growth was the sharpest recorded since November 2020.
Total demand for workers continued to decline during June, and at a quicker pace than in May. Underlying data indicated that this reflected a steeper reduction in permanent vacancies, as demand for short-term staff fell at the softest rate in ten months.
Lower demand for workers, tighter client budgets and improvements in candidate supply dampened pay growth in June. Starting salaries and temp wages both increased modestly overall, with rates of inflation notably weaker than their historical trends.
“Ongoing geopolitical turbulence and the threat of rising costs, alongside the promise of technology efficiencies, mean companies continue to wait and see with their hiring,” noted Jon Holt, Group Chief Executive and UK Senior Partner KPMG, “But where there have been recent Government commitments, such as in housebuilding and infrastructure, we are seeing a small increase in permanent vacancies in related sectors – construction and engineering – which is encouraging.
“As we head into the second half of the year, global headwinds will continue to impact the overall economic outlook, but clear priorities set out in the Industrial and Trade Strategies and growth in the services sector should provide some of that confidence business leaders need to start planning future investments and to consider their hiring activities.”
Neil Carberry, REC Chief Executive, said: “There is more volatility month by month in the jobs market right now, as employers assess a complex picture and hire when they need to, but not yet at the rate they might want to. Much of that hesitation stems from the scar tissue left by the Spring tax hikes and fear of further business tax rises. But underlying this, there are some signs of improving demand. Temporary vacancies, especially in the private sector, are resilient. And we are seeing more sectors adding vacancies in construction, logistics, engineering and healthcare. There is potential out there – if businesses are given a clear run at doing what they do best.
“Clarity and transparency from government is vital to build trust with business and drive recovery,” Carberry went on: “The new roadmap for the Employment Rights Bill allows for full and frank consultation on how the new rules will be shaped and gives breathing space to embattled businesses. Updating workplace protections is important, but striking the right balance with the business growth ambitions is the crucial part.”
