Recruitment market showing signs of recovery

Employers are becoming more confident in their hiring decisions, with an increase in permanent recruitment and growth in temporary placements for the first time in over a year.

Latest figures published by the Recruitment and Employment Confederation (REC) and KPMG showed the first rise in permanent appointments for 17 months and the first increase in temporary billings since July 2008.

The Report on Jobs, published today, showed that the index reading for the number of people placed in permanent positions was 50.6, compared to 46.1 for July – a reading above 50 signals change on the index scale.

Agency billings from the temporary/contract sector also rose from 45.1 in July to 50.3 in August.

Meanwhile, the rate of decline in demand for permanent staff eased to the weakest for 13 months in August with the Permanent Staff Vacancy Index climbing from 42.5 to 44.6.

Falls in wages and salaries continued but the reductions in both permanent and temporary/contract staff hourly wages were the slowest in 10 months.

Bernard Brown, partner and head of business services at KPMG, described the news as positive, but added it was too early to speculate whether it signalled the end of the recession.

“One important factor to watch over the coming months will be how the public sector is coping with the financial and economic crisis,” he said. “Given that employment costs are a substantial element of public sector spending, you would expect significant pressure on those costs going forward. This is likely to have a significant impact on the UK jobs market.”

Kevin Green, chief executive of the REC, warned that the stabilisation of the jobs environment must not be put at risk by “ill-designed regulation”, citing the Agency Workers Directive.

“This legislation needs careful consideration to avoid putting jobs at risk and must not be introduced until the last possible moment in 2011,” he said.

Elsewhere, a separate survey of 2,100 UK employers revealed that hiring confidence is starting to return among firms.

The UK’s net employment outlook rose from -6% to -2% during the fourth quarter of 2009 and 9% of employers intend to actively increase headcount over the next three months, the Manpower UK survey found.

Mark Cahill, managing director at Manpower UK, said: “There are a number of early positive hiring indicators emerging from employers in sectors including finance and business services, public and social and construction, which suggest we may have reached a turning point.”

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