Total vacancies drop for first time in over two and a half years

The total number of UK job vacancies fell for the first time since February 2021 in September, albeit marginally. 

The Recruitment and Employment Confederation and KPMG’s Report on Jobs for September found that employers were reluctant to commit to new permanent hires due to ongoing economic uncertainty and efforts to control costs.

However, REC chief executive Neil Carberry argued that the latest figures were a sign that the drop in the jobs market was levelling out, saying “this feels like a market that is finding the bottom of a year-long slowdown”.

Reflecting employers’ caution to hire permanent staff, temporary billings showed a fresh rise at the end of the third quarter. In both permanent and temporary markets, candidate availability improved once again, although at a slower pace than in July when it hit a high.

And while inflation continued to push up starting salaries, the rate of growth in wages went down to a two-and-a-half year low, and temp wages increased at the slowest rate in 31 months.

Demand for permanent staff fell in both the public and private sectors, but the drop was more marked in the public sector, the Report on Jobs found. Demand for temporary staff fell across the public sector.

The drop in permanent vacancies overall was driven by steep reductions in demand in the retail and construction sectors. Demand for temp staff rose most strongly in nursing, medical and care roles, it said.

Claire Warnes, partner, skills and productivity at KPMG UK, said the slight overall reduction in demand for staff was “concerning”.

“While both reductions are slight, employers are clearly nervous due to the long-term economic uncertainty and budget constraints that are impacting businesses everywhere,” she said. “This in turn is leading to a continued reliance on temporary staff.

“Skill shortages across a range of sectors – from permanent IT staff to temporary nursing roles – also continue to be an area of long-term concern for the economy.

“The labour market is starting to look slightly precarious again and recruiters will be wondering and hoping that the recent slight calming of inflation rates positively impacts the outlook for both employers and jobseekers.”

Carberry at the REC said he hoped to see a greater focus on skills investment in next month’s Autumn Statement.

“The REC would like to see a focus on skills, finally reforming the system to deliver a mix of high-quality courses within the levy framework, and action to tackle inactivity – like extending the Restart programme which has helped recruiters place thousands of long-term unemployed people into work,” he said.

“Both of these could form part of a long-overdue people and growth strategy. From reforming government procurement to better and more effective regulation, there is a lot government could do in partnership with recruiters to drive growth and prosperity.”

Slower wage growth in the coming months makes it less likely that the Bank of England will hike interest rates, which in turn will ease pressure on employers to push up salaries.

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