Permanent roles in the South of England drop for second month in a row

Permanent staff appointments in the South of England dropped for the second month running in October, according to the latest KPMG and REC, UK Report on Jobs: South of England survey.

While permanent positions have declined, temporary roles have seen a sharp growth, surrounded by reports that economic certainty and candidate shortages have been impacting hiring decisions as we move into the fourth quarter.

The data was compiled by S&P Global from the questionnaire responses from approximately 150 recruitment and employment consultancies in southern England.

Ian Brokenshire, Senior Partner at KPMG UK in the South West, said: “The looming recession is clearly impacting the UK jobs market. Employers’ increased reluctance to hire combined with fewer available candidates has resulted in the overall number of permanent placements falling. However this doesn’t negate the need for staff across the South, as evidenced by the sharp rise in temp billings.

“As we head to the end of Q4, we expect some employers to continue scaling back on new hires, and instead increase benefits and learning and development opportunities for current employees as a retention measure.  Now more than ever, it’s essential that we focus on upskilling the workforce to support and boost economic recovery when it comes. The jobs market will bounce back, particularly if we invest in the skills of the workforce across all sectors of the economy.”

While permanent appointments reduced, the report describes the pace of reduction as “mild”, noting that the South of England experienced the slowest reduction compared to the other three English regions monitored in the report.

Candidate shortages and a hiring slowdown predicated on economic and political uncertainty was a common theme in the comments of recruiters which registered lower permanent staff appointments.

On a national level, permanent placements declined for the first time in 20 months at a pace described as "solid”.

Conversely, recruitment billings from temporary placements in southern England rose again at the start of the Q4, picking up from September, in a trend which diverts from the national picture, which saw billings broadly stagnate in October. The South of England was the only region to see expansion, with the Midlands reporting the fastest rate of reduction.

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The picture is similar in vacancies, which experienced a further slowdown during October, suggesting continued cooling in the demand for staff.

Demand for permanent workers increased at the softest pace since February 2021, and one that was weaker than the UK-wide benchmark. Temp vacancy growth also moderated and slipped to a 21-month low, with only London seeing a weaker upturn out of the four English regions covered by the survey.

The report also states that pay awarded to new permanent staff in the South of England increased again in September, meaning it has now risen for 20 months in a row. This was regularly attributed to competitive market pressures, low candidate supply and the rising cost of living. It was, however, the slowest rate of increase since April 2021.

Neil Carberry, Chief Executive of the REC, said: “The economic and political uncertainty of September and October has caused employers to become more cautious in their approach to hiring than during the frenzy of earlier in the year. We’ve witnessed a further reduction in permanent staff appointments in the South of England for example, but temp billings growth has quickened. Activity, overall, is still well in advance of pre-pandemic levels. We will need to watch how this story develops over months to come, but so far this data suggests heightened employer caution, not a retreat from the market.

“It remains the case that firms in many sectors are struggling to hire, as hours worked remain below their pre-pandemic level despite record-low unemployment. We’re looking to the Autumn Statement later this month to help with removing the brakes on growth by reforming the apprenticeship levy to build a more effective skills system, improving support to help people move from inactivity to work, and align other policy areas – like work permits – with a growth strategy.”

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