July saw the slowest increases in permanent staff appointments and the use of temps in 17 months, as recruiters across the UK signalled a further slowdown in the growth in recruitment rates.
Caution over hiring new staff, triggered by the gloomy economic outlook, saw vacancy growth cool to a 16-month low, signalled the latest KPMG and the Recruitment and Employment Confederation, UK Report on Jobs survey, compiled by S&P Global.
The fact that temp billings rose more strongly than permanent staff appointments over the month was also an indicator of companies bracing themselves for a difficult winter.
A reduced supply of foreign workers and greater hesitancy among some people to apply for new roles led to a further marked drop in total candidate supply, found the report, although the rate of deterioration was the softest seen since April 2021.
Despite this, significant increases in starting pay were seen in July 2022, in response to the continuing imbalance between the supply and demand for workers and the cost-of-living crisis.
Recruitment consultancies reported a further sharp increase in demand for staff during July. Yet the rate of vacancy growth eased for the third month in a row and was the slowest recorded since March 2021, as the downturn in the availability of both permanent and temporary workers eased compared with June.
Recruitment and the economy
Overall, however, there were widespread reports of skills shortages, fewer foreign workers and a greater hesitancy to seek out new roles due to increased economic uncertainty and concerns over job security.
Rates of starting pay continued to rise sharply for both permanent and short-term workers in July. The latest increase in starting salaries was the least marked for 11 months, however, while temp wage inflation softest to the slowest for just over a year.
As for regional variations all English regions bar the North saw a weaker upturn in permanent staff appointments during July, with recruitment agencies in London seeing the steepest increase in temp billings during July.
The softest upturn was meanwhile recorded in the Midlands, where growth eased to a marginal pace.
The private sector recorded the strongest increase in vacancies, while the softest rise was observed for permanent roles in the public sector, with both sectors saw slower increases in demand for staff compared to the previous month.
In terms of sectors experiencing high demand for workers, hospitality topped the rankings at the start of the third quarter of 2022, while retail remained at the bottom.
Confidence was a major factor in the findings, said Kate Shoesmith, deputy CEO of the REC. She said: “We’ve seen that rising fuel and energy prices, inflation and labour shortages are impacting employer confidence. It’s vital that government and businesses start putting their people and their staffing strategies first.
“We know what needs to be done: there should be improved provision of skills training, increased employment from under-represented groups, and we need good transport, childcare and immigration systems.”
Claire Warnes, head of education, skills and productivity at KPMG UK, added that, given the economic outlook, “workers may well choose to stay where they are rather than risk job security by moving now. So, a focus on upskilling existing workers and attracting talent remains absolutely essential for UK business to play its part in driving forward the economy.”
Yesterday, the Bank of England forecast that a recession would begin in the autumn and that CPI inflation would peak at 13.3%.