November saw the steepest decline in the number of people placed in permanent positions by UK recruitment consultants since August 2023.
The latest Recruitment and Employment Confederation/KPMG report on labour market trends found that many respondents felt that the Budget in late October had led to a reassessment of staffing needs by clients. Similar factors led to a fifth successive decline in temporary staff billings.
Latest data showed that average weekly earnings growth in the UK rose on an annual basis to 4.3% in September. That was up from 3.9% in August and a three-month high. The public sector was behind the acceleration of wider earnings growth. Latest data showed that public sector earnings were up by 3.5% on a year ago. That compared to 0.1% in August as 2023 one-off payments to NHS and civil service sector staff fell out of annual comparisons. Meanwhile, private sector earnings growth slipped to 4.5%, from 4.8% and the lowest level for 3.5 years.
Salary growth overall, meanwhile, was limited by reduced demand for staff permanent salary growth and was little changed on October’s 44-month low in November.
Vacancy numbers declined at a sharp and accelerated pace during November. It was the 13th successive month in which a fall in staff demand had been registered, and the latest drop was the largest recorded for more than four years. The most severe drop in demand was seen for permanent workers. Conversely, amid reports of a growing number of redundancies at clients, recruitment consultants signalled the steepest rise in overall staff availability for three months in November.
Temp billings declined for a fifth successive month in November, although the contraction was slower than rates seen in September and October.
Jon Holt, group chief executive and UK senior partner KPMG, said the figures reflected initial feelings about the Budget: “Businesses are having to weigh up the prospect of increasing employee costs following the Budget, which has led to an accelerated slowdown in hiring activity across the board.”
This slowdown, alongside a growing availability of candidates in the market, said Holt, could put more downward pressure on wage inflation, which remained largely unchanged on last month’s 44-month low.
“This trend will be encouraging for the Bank’s monetary policy committee ahead of the next meeting later this month, although it may not be enough to counter wider inflationary pressures we are seeing in the economy,” he added.
Holt said the prospect of further rate cuts through 2025, alongside the government’s investment plans, both pointed to improved growth in the near term. This could give businesses greater confidence and may help stabilise the labour market.
Commenting, Neil Carberry, REC Chief Executive, said: “The drop in vacancies was led by private sector permanent roles, and slower permanent recruitment billings across the month also reflected this trend. The real question now is whether businesses will return to the market as they go into next year with greater certainty about the path ahead. The resilience of temporary recruitment offers some hope.”
For policymakers, ensuring new regulations supported rather than weakened the UK’s flexible jobs market was vital, Carberry added. “Ensuring rules introduced by the Employment Rights Bill are tailored to protect agency and temporary work really matters for people,” he said.
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