South experiences fastest decline in permanent job placements since February 2021

Permanent placements in the South of England fell at their fastest rate since February 2021 last month (November), although temporary billings continued to rise.

This is according to the most recent UK Report on Jobs from KPMG and REC, which was compiled by S&P Global from the responses to approximately 150 recruitment and employment agencies in the region.

The decline in permanent staff appointments last month is described as “solid and accelerated”, reducing for the third month in a row and at its quickest pace since February 2021. The South experienced the fastest pace of decline in the country, with hiring stalled by a weak economic climate and uncertain outlook.

This economic uncertainty has contributed to temporary billings increasing in November for the 28th month in a row. While this grew slightly slower than in previous months, it remains sharp overall and much quicker than the national trend.

Demand for permanent staff rose for the twenty-second month in a row, though the rate of expansion was the softest seen over this period and modest. Temp vacancy growth also moderated and, though solid, was the weakest recorded since January 2021. Furthermore, rates of vacancy growth remained weaker than those seen at the national level.

The availability of permanent staff continued to fall last month, although at a slower rate than previously, with the latest drop in availability the least marked since March 2021. While uncertainty surrounding outlook, Brexit and low unemployment rates continue, redundancies have seen supply improve slightly according to some recruiters.

The seasonally adjusted Temporary Staff Availability Index remained below the neutral 50.0 level to signal a drop in temp labour supply across the South of England for the twenty-first successive month in November. Though solid, the pace of reduction was the second-slowest since March 2021 and slightly softer than the national rate. Recruiters often commented that candidates preferred permanent jobs, while tight labour market conditions also limited candidate supply.

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Salaries awarded to newly placed permanent workers in the South of England continued to increase midway through the fourth quarter. Though sharp and above the series average, the rate of inflation slipped to its weakest for just over a year-and-a-half. There were reports that difficulties filling roles had led firms to increase rates of pay, while cost of living pressures were also cited as having pushed up salaries.

Ian Brokenshire, Senior Office Partner at KPMG UK in the South West, said: “Of particular note this month is the continued decline in permanent placements. This reflects the combined effects of employers reining in recruitment, candidate availability continuing to decline, and workers staying put for job security.

“The cost of living pressures that households are enduring and the industrial relations impasse within many sectors will be behind the current salary inflation, however,  wage growth may well be trending down in the months ahead.

“Employers who are able to offer existing workers and candidates opportunities to upskill and reskill, rather than focusing solely on core pay, may well benefit most in this tight jobs market.”

Neil Carberry, Chief Executive of the REC, said: “This month’s data emphasises that while employers are moderately more cautious in the face of economic uncertainty, this is not yet a major slowdown in hiring. While permanent recruitment activity in the South has dropped from the very high levels of earlier in the year, the pace of that drop is not as severe as those seen at the start of 2021.

“In contrast, temporary hiring has accelerated again in the run-up to Christmas amid signs of some switching to temporary staff going on, as firms maintain flexibility ahead of next year.

“As the economic outlook weakens, we can expect to see falls from historic highs across our measures, but it is notable that pay and vacancies are still growing, although at a much lower rate.

“A flatter period in the labour market is inevitable in this current economic climate, but demand is being supported by some major underlying factors, including labour shortages and technological change. The main way to boost performance is to unlock growth by businesses putting their people planning first, as a strategic way to enhance productivity. Government can help through skills and immigration reform. Boosting growth is the only way to ensure a prosperous country for all of us.”

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