The latest KPMG and REC, UK Report on Jobs: Midlands survey signalled a renewed contraction in temporary billings at the end of the third quarter, and a much softer rise in permanent placements. Signs of weakness reflected slower growth in demand for staff and ongoing difficulties sourcing candidates. Supply limitations meant that pay inflation remained elevated.
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.
Near-stagnation of permanent placements
Recruitment companies in the Midlands signalled a sharp slowdown in the pace of growth in permanent staff appointments during September. Placements were up only slightly over the course of the month, and to the least extent in the current 19-month sequence of expansion. Where an increase was recorded, panellists linked this to rising demand for staff. On the other hand, there were a number of reports that candidate shortages had limited the pace of growth. The increase in permanent placements in the Midlands was slower than the UK average. Meanwhile, the South of England was the only English region to record a drop in permanent placements.
Temp billings decline
September data pointed to a renewed contraction in temporary billings in the Midlands, thereby ending a 26-month sequence of expansion. The Midlands was the only one of the four English regions to post a reduction in temporary billings at the end of the third quarter. Anecdotal evidence suggested that the drop reflected a combination of candidate shortages and hesitancy among companies when making hiring decisions. Growth of temporary billings was recorded elsewhere, with the sharpest rise in the North.
There was a noticeable slowdown in growth of demand for staff in the Midlands during September, with vacancies for both permanent and temporary roles rising at softer rates.
Vacancies for permanent staff continued to increase sharply, but the rate of expansion eased to the weakest since February 2021 when the current sequence of growth began. Meanwhile, demand for temps rose at the slowest pace in 20 months.
Sharp fall in permanent candidate availability
Permanent candidate numbers continued to decrease at a rapid pace during September, although the rate of deterioration softened to the weakest since April 2021. According to respondents, concerns around economic conditions and the cost of living led to a reluctance among candidates to move roles. The fall in permanent staff availability in the Midlands was the softest of the English regions covered by the survey. The North posted the fastest fall.
Softer reduction in temporary candidate numbers
Although recruitment companies in the Midlands continued to report deteriorating candidate numbers for temporary roles in September, the pace of reduction eased markedly from the previous month and was the weakest for a year-and-a-half. Some respondents indicated that candidates were more keen on permanent roles at present, while others reported that Brexit had limited the supply of temps. As was the case with permanent availability, the fall in temporary candidates was most pronounced in the North. Meanwhile, the South of England saw a near-stabilisation of candidate supply.
Permanent salary inflation remains elevated
Recruitment companies in the Midlands reported a further steep rise in starting salaries awarded to permanent staff in September, with the rate of inflation little changed from that seen in the previous survey period. The increase in the Midlands was faster than the UK average. Candidate shortages was the principal factor leading to higher salaries. London posted the fastest rise in permanent salaries, just ahead of the Midlands.
Softer rise in temp wages
September data pointed to a further marked rise in wages paid to temporary staff in the Midlands, with the rate of inflation remaining above the series average. That said, the latest increase was softer than that seen in August. As was the case with permanent salaries, the key factor leading to higher temp pay was candidate shortages. The South of England recorded the fastest pace of inflation of the four English regions monitored, with the slowest increase in London.
Commenting on the latest survey results, Kate Holt, people consulting partner at KPMG UK, said: “It comes as no surprise that the overall downward trend in the jobs market, in terms of vacancies available and candidate supply, continues. Workers are choosing to stay put in current roles, rather than apply for new roles, due to the overall sense of economic uncertainty that many feel, which is reflected in the downturn in temporary billings.
“Employers, even those who anticipate that the recession may be short, are taking steps now to cut back on spending, including hiring freezes. Those employers who continue to invest in their workforce, particularly upskilling, may find they weather the recession better and will be in a stronger position to benefit from the upturn as and when it comes.”
Neil Carberry, Chief Executive of the REC, said: “The challenges we see in today’s data reflects the underlying shortage of labour the UK faces. With unemployment at record lows, pay continues to rise for both temporary and permanent workers starting new jobs, and activity levels across the recruitment and staffing industry remain high. While any economic slowdown this winter will affect the market, the extent of shortages mean that hiring will remain a focus for employers.
“The REC has shown that failing to address these issues could cost our economy massively in the years to come. While there is much that Government can do, like reforming the failed Apprenticeship Levy, a lot of the answers lie with hiring businesses. Firms need to work with skilled recruiters on offers that will maximise the skill base we have. There has never been a more important time for business leaders to put the people stuff first.”
