September saw a further fall in the number of permanent staff placements, new figures show, as businesses await the new UK government’s first budget.
The latest KPMG/REC Report on Jobs survey revealed that the downturn in appointments now extended to two years, although the latest contraction was slightly softer than August’s five-month record. Uncertainty in the outlook ahead of late October’s Budget meant companies were cautious in their hiring activity.
Although there remained reports of shortages in suitable candidates, which helped to boost pay rates, permanent staff salary growth eased again in September. It was the third month in a row in which salary inflation has fallen.
Vacancies
The latest survey data showed an 11th successive monthly fall in staff vacancies, with the pace of contraction accelerated to the steepest since March.
Office for National Statistics data indicated that August was the 26th month in a row that a quarterly decline had been registered, with the latest contraction the steepest of the year-to-date. The overall number of vacancies was at 857,000 – some 140,000 lower than a year ago. Despite the continuous downturn, however, vacancy numbers were still some 61,000 higher than on the eve of the 2020 global pandemic, found the study.
Labour market in UK
UK jobs market at its tightest for three years
Both private and public sector permanent staff vacancies declined during September, with the steeper contraction again registered for public sector workers.
In terms of sectors, the steepest fall in vacancies was seen for retail workers. Where growth was registered, the best performance was recorded for nursing and medical care.
Salaries increase
Although typical starting salaries increased for a 43rd successive month in September, the rate of inflation was relatively modest. Shortages of suitable labour continued to push up salaries for higher calibre candidates. The steepest increase in salaries was seen in the Midlands. In contrast, only a marginal rise was recorded in the north of England.
Total employee earnings continued to rise on an annual basis during July. Private sector earnings growth eased to 4.8% in July, from 5.1% in the previous month. Earnings in the public sector increased at a slower pace, owing to one-off payments made to NHS and civil service staff one year ago, dropping to an annual rate of just 0.8%. That was the weakest increase since May 2015.
Business confidence
Jon Holt, group chief executive and UK senior partner KPMG, said the slowing of hiring activity seen in September
was to be expected as businesses applied the brakes ahead of the Budget. He added: “The Bank of England will likely be encouraged by this easing in pay pressures, which could strengthen the case for a further cut in interest rates in the upcoming November meeting.
“The government needs to continue to give chief execs confidence in the UK’s macroeconomic conditions and the
country’s route to stronger growth.”
For Neil Carberry, REC chief executive, the picture was “of a jobs market waiting for a signal”. Recruiters reported that projects in client businesses were ready to go, he said, but “confidence is not yet high enough to push the button”.
He said: “The chancellor has a huge opportunity at the budget to drive confidence in our economy. Firms want a clear industrial strategy focusing on key growth enablers such as the workforce, infrastructure, access to capital, and the tax system.
“They also need clarity on the changes to employment law that are planned – as uncertainty in this area is also slowing employer confidence right now.”
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