Recruitment consultancies in the south of England registered a further deterioration in hiring activity during November.
Permanent staff appointments and temp billings both declined, and at faster rates than in October. An uncertain outlook was widely linked to the weak hiring trend, with many firms noting that clients were cancelling or postponing decisions until there was greater clarity around the future. Furthermore, demand for staff remained historically subdued.
Uncertainty also weighed on candidate numbers, which continued to fall sharply in November. Although this placed further upward pressure on pay, increases in starting salaries and wages weakened since October.
The KPMG and REC, UK Report on Jobs: South of England is compiled by IHS Markit from responses to questionnaires sent to around 150 recruitment and employment consultancies in the South of England.
Permanent placements decline at quickest rate since June
The seasonally adjusted Permanent Placements Index signalled a ninth successive monthly drop in permanent staff appointments across the south of England in November. There were numerous reports that employers were holding off or cancelling hiring plans due to political and economic uncertainty.
The rate of reduction quickened to the most marked for five months and was solid overall. At the UK level, permanent staff appointments fell for the ninth month in a row, albeit at a modest pace. The Midlands was the only other monitored region to register a decline, as permanent placements increased in London and the North of England.
Billings received from the employment of temporary staff in the south of England fell for the second month running in November. Though modest, the rate of decline was the strongest seen since mid-2012. Uncertainty was also highlighted as a key factor dampening temp billings. Notably, the south was the only monitored English region to record a fall. That said, temp billings rose only marginally across the UK as a whole.
Growth of demand for staff remained relatively subdued across the south of England in November. Permanent vacancies increased at a marginal pace that was unchanged from October’s decade-low. Growth of demand for short-term workers meanwhile improved to a six-month high. That said, the upturns in both permanent and temporary vacancies remained weaker than those seen at the national level, and were subdued by historical standards.
Fastest reduction in permanent labour supply for five months
The number of people available to fill permanent job roles in the south of England fell further in November. The rate of deterioration accelerated to the steepest since June, and remained much quicker than the series average. According to anecdotal evidence, uncertainty stemming from the upcoming election and Brexit had deterred many people from seeking out new roles. At the national level, permanent labour supply also fell at the quickest rate for five months, with all four monitored English regions seeing marked reductions.
Adjusted for seasonal factors, the Temporary Staff Availability Index signalled a sustained drop in the supply of short-term staff in the south of England during November. Panel members linked the fall to a reluctance among candidates to change roles, concerns around upcoming IR35 changes and fewer EU workers. Though solid overall, the pace of deterioration was the least marked for three months and slower than the national average. Of the four monitored English regions, the Midlands reported the steepest rate of reduction. Meanwhile, the north of England bucked the overall downward trend, registering a modest increase in temporary candidate supply.
Starting salaries rise at slowest rate for over three years
Recruitment consultancies in the south of England signalled a further increase in salaries awarded to permanent new joiners in November. Though still sharp overall, the rate of growth was the least marked since August 2016. Higher starting salaries were widely associated with candidate shortages and efforts to attract skilled workers. A softer rate of permanent pay growth was also seen at the UK level. All monitored English regions bar the North of England saw slower increases in starting salaries compared to October.
Latest data indicated that remuneration awarded to temporary staff in the south of England rose for the ninety-second month running in November. Anecdotal evidence suggested that candidate shortages had led clients to up their wage offers. Though solid, the rate of wage inflation was slower than that seen in October and weaker than the average seen over the current period of pay growth. Across the UK as a whole, temp pay growth eased to a three-year low, with softer rates of inflation seen in three of the four monitored English regions.
Andrew Morgan, senior partner at KPMG in the Thames Valley, said: “The jobs market in the south appears to have caught a winter cold. A decline in hires for permanent and temporary positions points to a business community that is a little under the weather. Political and economic clarity will be the perfect tonic for employers and address the lethargy that is holding back new roles being created and stopping job seekers from considering new opportunities.”