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The KPMG and REC, UK Report on Jobs: Midlands survey, compiled by S&P Global, showed that recruitment trends diverged in July. Notably, permanent placements fell solidly, while temp billings expanded at the quickest rate for nearly a year. There were often reports that firms were hesitant to commit to permanent hires due to prevailing economic uncertainty as well as shortages of skilled candidates.

Pay pressures continued to build, as competition for highly-skilled workers and the rising cost of living pushed up rates of starting pay. That said, upturns in both salaries and wages remained far below the peaks seen over the past two years. At the same time, the availability of workers rose at a sharp and accelerated rate, with a number of recruiters linking this to redundancies. Vacancies data meanwhile showed further increases in demand for short-term and permanent staff, though upturns remained softer than their respective averages.

The KPMG and REC, UK Report on Jobs: Midlands is compiled by S&P Global from responses to questionnaires sent to around 100 recruitment and employment consultancies in the Midlands.

Further solid drop in permanent staff appointments

Recruitment consultancies based in the Midlands registered a further reduction in the number of people placed into permanent jobs during July. This extended the current sequence of decline to eight months. The rate of contraction was the quickest since April and solid, albeit the softest seen across all four monitored English areas.

According to panel members, a combination of reduced confidence in the outlook and the limited availability of skilled workers had impacted permanent staff hiring during the latest survey period.

July survey data signalled a back-to-back increase in temp billings across the Midlands. Furthermore, the rate of expansion was the quickest recorded since August 2022 and solid overall. Recruiters widely linked the rise to increased demand for short-term staff and in some cases improved candidate availability.

The strong rate of billings growth in the Midlands contrasted with only a fractional uptick at the national level. London was the only other English region to register higher billings, though growth was only mild.

Permanent vacancies in the Midlands continued to rise in July, thereby extending the current run of expansion to two-and-a-half years. The rate of growth was sharp, and picked up slightly since June. Recruiters also recorded a quicker increase in temp vacancies in July, with the rate of expansion the sharpest for three months.

Overall, the Midlands saw the most pronounced upturns in demand for staff of all four monitored English regions in the latest survey period.

Fastest rise in permanent labour supply since December 2020

The availability of permanent staff across the Midlands increased for the fourth straight month in July. Moreover, the rate of expansion accelerated to a rapid pace that was the quickest in just over two-and-a-half years. Redundancies were a key driver of improved staff availability, according to panellists.

Sharper increases in permanent labour supply were also recorded in the three other monitored English areas, and ones that outpaced that seen in the Midlands.

The seasonally adjusted Temporary Staff Availability Index pointed to a third successive monthly upturn in temp candidate numbers across the Midlands during July. The rate of growth quickened slightly on the month, and was the sharpest since October 2020. Recruiters often commented on greater amounts of people looking for short-term roles.

At the UK level, the uptick in temp labour supply remained slower than that seen in the Midlands, but was sharp overall. London recorded the most rapid increase in temp candidate numbers overall.

Stronger rise in starting salaries

Midlands-based recruiters signalled a further rise in starting salaries for permanent staff at the start of the third quarter. The rate of pay growth picked up from June’s 28-month low and was sharp overall. Competition for skilled workers reportedly pushed up permanent salaries. That said, the increase remained slower than seen on average over the current 29-month period of inflation.

Of the four English areas monitored by the survey, only the North of England registered a quicker upturn in starting salaries than that seen in the Midlands.

As has been the case since December 2020, average hourly rates of pay for temp staff increased at the start of the third quarter. However, the rate of wage inflation edged down to the weakest seen in 27 months and was below the series average. Candidate shortages and efforts to attract applicants were cited as key factors driving up pay.

The increase in temp pay in the Midlands was slightly softer than that recorded across the UK as a whole. Wages rose across all four monitored English regions, with the North of England registering the fastest rate of growth.

Commenting on the latest survey results, Kate Holt, people consulting partner for KPMG in the Midlands, said: “The data for July shows a split in what employers are doing when it comes to hiring across the Midlands. A lack of skilled candidates and the continuing economic uncertainty has resulted in a fall in permanent hires, but a rise in temporary workers. However, in good news for those seeking a permanent role the latest figures have highlighted a rise in starting salaries.”

Neil Carberry, REC Chief Executive, said: “The jobs market overall in the Midlands remains fairly robust, with temp vacancies expanding solidly and pay still rising, and unemployment low across the UK but there is a sense in today’s report that the economy will need some growth soon to sustain this positive picture.

“Permanent hiring has been slowing all year. To some extent this is normalisation as the post-pandemic boom abates – but it is also driven by uncertainty. This is seen in the scale of companies reshaping themselves while hiring in other areas – recruiters in the Midlands reported the fastest rise in permanent labour supply since December 2020 and a steep rise in temporary labour supply, driven by an increase in redundancies.

“But it is also obvious in the way firms are relying on temporary labour to keep things going in uncertain times. Temping keeps people in work when firms are uncertain about the future path of the economy – it is a huge UK success story.