KPMG and REC, UK Report on Jobs
Hiring activity growth softens further in May
Hiring activity growth softens further in May
Slower increases in permanent placements and temp billings
Downturn in candidate supply eases only slightly
Pay pressures remain historically sharp
Data collected May 12-25
The latest KPMG and REC, UK Report on Jobs survey, compiled by S&P Global, pointed to a further slowdown in hiring activity midway through the second quarter. Recruiters noted the softest upturns in permanent placements and temp billings since early-2021, with a number of panellists stating that candidate shortages had hampered their ability to fill roles. Overall candidate availability continued to fall sharply, albeit at the weakest rate since January.
At the same time, there was a further steep increase in demand for staff, though growth of total vacancies edged down to a three-month low. A shrinking pool of candidates and strong vacancy growth meant that rates of starting pay continued to rise sharply, particularly for those taking up permanent positions.
The report is compiled by S&P Global from responses to questionnaires sent to a panel of around 400 UK recruitment and employment consultancies.
Sustained slowdown in growth of recruitment activity
May survey data pointed to a further robust increase in hiring activity across the UK, though there were signs of a further slowdown in overall growth. Notably, permanent staff appointments expanded at the softest rate since March 2021, while temp billings increased at the weakest pace in 15 months. Recruiters often mentioned that candidate shortages had weighed on placements.
Permanent Placements Index
Candidate availability continues to fall rapidly
A further marked deterioration in overall candidate supply was seen in May. This was despite the rate of reduction easing to the softest in four months. Underlying data indicated that permanent candidates continued to decline at a faster pace than that seen for temporary workers. Moreover, the latest reduction in short-term staff supply was the least severe for just over a year. Panel members often mentioned that greater caution around the outlook, widespread skills shortages and fewer foreign workers had weighed on staff availability.
Overall vacancies expand sharply
Demand for staff continued to rise at a historically sharp pace in May. Broken down by job type, permanent vacancies continued to expand at a quicker rate than that seen for temp roles. Notably, demand for short-term staff increased at the softest pace for five months.
Starting salary inflation remains close to record-high
With the supply of workers falling further and demand for staff remaining robust, recruiters noted sustained upward pressure on rates of starting pay in May. Despite softening to a four-month low, permanent starters' salaries rose at a rapid pace that was among the quickest since the survey began in October 1997. Temp pay growth was also sharp, albeit the slowest seen for 11 months.
Regional and Sector Variations
London registered the strongest increase in permanent placements of all four monitored English regions, while the softest was seen in the South of England.
All four monitored English regions registered softer rises in temp billings in May except the North of England, which saw the strongest overall rise.
Sector data showed that demand for staff in the private sector continued to outpace that seen in the public sector during May. The quickest rise in vacancies was seen for permanent roles in the private sector, even though the pace of expansion softened to a 13-month low. Meanwhile, the softest upturn in demand was signalled for short-term staff in the public sector.
IT & Computing posted the strongest increase in demand for permanent staff in May, closely followed by Hotel & Catering. Nonetheless, steep increases in vacancies were also seen across the other eight monitored job categories.
May survey data also pointed to a broad-based increase in demand for short-term staff, led by Hotel & Catering. The softest rise in temporary vacancies was meanwhile signalled for Retail.
Commenting on the latest survey results, Claire Warnes, Head of Education, Skills and Productivity at KPMG UK, said:
“For over a year now, we have seen a sustained mismatch in the growing numbers of vacancies in every sector of the economy against the inadequate supply of skilled candidates. The initial effects of this have been obvious, in particular the driving up of starting salaries. However, perhaps we are starting to see wider consequences of the systemic issues in the available workforce to support the growth opportunities which employers are chasing. We’ve seen the softest rise in permanent placements and temporary billings for over a year, and the growth in total vacancies hit a three month low. Candidate availability is still falling, so it remains a hot market for those well-qualified in their sectors. But are employers starting to rethink their growth plans because of skills shortages which are proving difficult to fix as quickly as they need?
“Job-seekers and employers alike are facing the greatest cost of living challenges in recent years. As these are expected to increase, at least in the short term, we will need to closely monitor the impact on recruitment confidence as well as growth appetite in key sectors of the economy. Employers are also continuing to face rising business costs and supply chain disruption, which will test the resilience of many as geo-political and economic turbulence continues."
Neil Carberry, Chief Executive of the REC, said:
“These numbers show a hugely positive jobs market if you are looking for work. While the pace of growth has dropped after a stellar first quarter, by any normal measure there are still lots of vacancies out there, offering improved wages. For companies, they emphasise again that hiring is a challenge in this market, and getting it right matters – the help of professional recruiters will be vital. The market for temporary work is stabilising faster than for permanent staff, which could suggest a little caution creeping into employers’ thinking in the face of high inflation.
“But compared to pre-pandemic, labour supply is still the big issue we have to solve. With over half a million people missing from the jobs market, and demand still growing strongly, this is a big, strategic issue for the UK. Growth is essential to funding public services and paying higher wages sustainably. Any plan for growth must include action to help people into work from inactivity, skills reform, support for innovation on productivity and targeted immigration reform.”
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The KPMG and REC, UK Report on Jobs is compiled by S&P Global from responses to questionnaires sent to a panel of around 400 UK recruitment and employment consultancies.
Survey responses are collected in the second half of each month and indicate the direction of change compared to the previous month. A diffusion index is calculated for each survey variable. The index is the sum of the percentage of ‘higher’ responses and half the percentage of ‘unchanged’ responses. The indices vary between 0 and 100, with a reading above 50 indicating an overall increase compared to the previous month, and below 50 an overall decrease. The indices are then seasonally adjusted.
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The REC is the voice of the recruitment industry, speaking up for great recruiters. We drive standards and empower recruitment businesses to build better futures for their candidates and themselves. We are champions of an industry which is fundamental to the strength of the UK economy. Find out more about the Recruitment & Employment Confederation at www.rec.uk.com.
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