KPMG and REC, UK Report on Jobs

Hiring activity growth softens further in May

Hiring activity growth softens further in May

Key findings

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

Summary

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.

Connect with us

 

Want to do business with KPMG?

 

loading image Request for proposal

Save, Curate and Share

Save what resonates, curate a library of information, and share content with your network of contacts.

Sign up today

Permanent Placements Index

Permanent Placements Index

50.0 = no-change

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.

 summary of data

Comments

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.”

Contact

KPMG

Chris Mostyn

Deputy Head of Media Relations

T: +44 (0)7512 448000

chris.mostyn@kpmg.co.uk

 

REC

Josh Prentice

Comms Manager

T: +44 (0)20 7009 2129

josh.prentice@rec.uk.com

 

S&P Global

Annabel Fiddes

Economics Associate Director

S&P Global Market Intelligence

T: +44 (0)1491 461 010

annabel.fiddes@spglobal.com

 

Joanna Vickers

Corporate Communications

S&P Global

T: +44 207 260 2234

joanna.vickers@spglobal.com

Methodology

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.

Underlying survey data are not revised after publication, but seasonal adjustment factors may be revised from time to time as appropriate which will affect the seasonally adjusted data series.

For further information on the survey methodology, please contact economics@hismarkit.com.

Full reports and historical data from the KPMG and REC, UK Report on Jobs are available by subscription. Please contact economics@hismarkit.com.

About KPMG

KPMG LLP, a UK limited liability partnership, operates from 22 offices across the UK with approximately 15,300 partners and staff.  The UK firm recorded a revenue of £2.43 billion in the year ended 30 September 2021. 

KPMG is a global organization of independent professional services firms providing Audit, Legal, Tax and Advisory services. It operates in 145 countries and territories with more than 236,000 partners and employees working in member firms around the world. Each KPMG firm is a legally distinct and separate entity and describes itself as such. KPMG International Limited is a private English company limited by guarantee. KPMG International Limited and its related entities do not provide services to clients.

About REC

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.

About S&P Global

S&P Global (NYSE: SPGI) S&P Global provides essential intelligence. We enable governments, businesses and individuals with the right data, expertise and connected technology so that they can make decisions with conviction. From helping our customers assess new investments to guiding them through ESG and energy transition across supply chains, we unlock new opportunities, solve challenges and accelerate progress for the world.

We are widely sought after by many of the world’s leading organizations to provide credit ratings, benchmarks, analytics and workflow solutions in the global capital, commodity and automotive markets. With every one of our offerings, we help the world’s leading organizations plan for tomorrow, today. www.spglobal.com.

Disclaimer

The intellectual property rights to the data provided herein are owned by or licensed to S&P Global and/or its affiliates. Any unauthorised use, including but not limited to copying, distributing, transmitting or otherwise of any data appearing is not permitted without S&P Global’s prior consent. S&P Global shall not have any liability, duty or obligation for or relating to the content or information (“data”) contained herein, any errors, inaccuracies, omissions or delays in the data, or for any actions taken in reliance thereon. In no event shall S&P Global be liable for any special, incidental, or consequential damages, arising out of the use of the data.

This Content was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global. Reproduction of any information, data or material, including ratings (“Content”) in any form is prohibited except with the prior written permission of the relevant party. Such party, its affiliates and suppliers (“Content Providers”) do not guarantee the accuracy, adequacy, completeness, timeliness or availability of any Content and are not responsible for any errors or omissions (negligent or otherwise), regardless of the cause, or for the results obtained from the use of such Content.  In no event shall Content Providers be liable for any damages, costs, expenses, legal fees, or losses (including lost income or lost profit and opportunity costs) in connection with any use of the Content.