Survey shows rapid decline in permanent new hires in south

A survey has shown a decline in the number of new permanent hires in the South in October this year, extending the run of falling numbers to 19 months. It was put down to the cooling economy and the upcoming autumn Budget.

The latest KPMG and REC, UK Report on Jobs: South of England survey, was compiled by S&P Global and covered the period from October 10 to 25.

READ MORE: Business confidence among South East firms fell in October

Responses are gathered from questionnaires sent to around 150 recruitment and employment consultancies in the region.

All four monitored regions in England saw a decrease in new permanent staff appointments, with the South registering the most pronounced decline for the eighth month in a row, it has emerged.

Conversely, London noted the weakest contraction among the four regions but was the only area to register a milder drop.

The demand for permanent workers also declined rapidly across the South, marking successive monthly contractions for the past 15 months, while the rate of reduction was the most pronounced since the summer of 2020.

Likewise, temporary vacancies in the South also saw a significant drop and the downturn in October was the sharpest since July 2020.

"The continued decline in both permanent hires and temporary billings reflects the caution businesses are exercising in the South, which saw the steepest drop in vacancies nationwide last month as firms pulled back on hiring ahead of the Autumn Budget," noted David Williams, office senior partner at KPMG in Bristol.

Neil Carberry, REC chief executive, added: "These figures are a timely reminder that demand from employers for new staff has weakened since the election – though the overall picture remains resilient by comparison to pre-pandemic.

"The downturn in the South was linked to a cooling economic environment and rising uncertainty due to the upcoming Budget, diminished business needs and higher minimum wages.

Carberry said, however, things now stood "in the balance" and urged the government to act.

"Firms need to be persuaded to invest, with recent changes to NI thresholds, the minimum wage and prospective changes to employment law all causing concern.

"Firms will be looking for the Government to deliver a clear, stable growth plan and detailed regulatory changes that enable firms rather than put them off over the next few months.

"Temporary work in particular is a fantastic way of helping people takes steps out of inactivity, and the threat of new employment laws undermining opportunities for workers must be addressed," he suggested

"With starting salary inflation easing to 44-month low in the South and minimal rise in temp wages in the region, there is little to suggest that the Bank of England should not step away from further cuts to interest rates, which will also boost business confidence," he added.

"And data on shortage sectors is a timely reminder that delivering on a skill strategy that is aligned to business needs is one of the biggest things Government and businesses could achieve working together."

The survey revealed that permanent staff availability rose for a twentieth consecutive month across the South in October and the rate of growth had picked up from September's 12-month low and was rapid overall.

Recruiters in the South also reported a rise in salaries for new permanent hires, but the October data indicated a further slowdown in the rate of increase.

While rises were often linked to higher demand for senior roles and skilled workers, the Budget, greater supply of permanent workers, and subdued economic conditions caused some firms to lower their offers, thereby resulting in an only a marginal uptick overall.

KPMG is a global organisation of independent professional services firms providing audit, legal, tax and advisory services. The recruitment and employment confederation (REC) describes itself as the voice of the recruitment industry.