The latest KPMG and REC, UK Report on Jobs: North of England survey portrayed gloomy conditions in the region’s labour market during July as permanent staff placements and temporary billings both declined.
Furthermore, amid reports of layoffs, the availability of both types of candidates rose sharply and to the greatest extents since December 2020. Job vacancy growth meanwhile slowed and pay pressures remained considerably weaker than a year ago.
The KPMG and REC, UK Report on Jobs: North of England is compiled by S&P Global from responses to questionnaires sent to around 150 recruitment and employment consultancies in the North of England.
Warren Middleton, Office Senior Partner at KPMG in Manchester, said: “The positive signs we saw emerging in June were short-lived and appear to have been a false dawn. The significant declines in both permanent and temporary staff placements across the North show that the challenges facing the economy are weighing heavily on growth ambitions and the appetite to hire.
“Salary inflation is still high and there remains an intense battle for top talent, but the relentless upward pressure has eased somewhat, which will be welcomed by businesses watching their margins. For job seekers, they may start to experience more competition for roles as the dynamics in the market start to shift with job creation slowing and redundancies bringing more people to the jobs boards.”
Permanent staff appointments return to contraction in July
Having risen in June for the first time since February, permanent staff placements across the North of England resumed the downward trend seen in almost every month since October last year. Reduced appetite for new hires among clients, in addition to candidate hesitancy, were factors linked by surveyed recruiters to the decline.
The rate of contraction was solid overall but much weaker than that seen for the UK as a whole. Among the four English regions monitored by the survey, London saw the most pronounced drop overall. The softest decline was meanwhile recorded in the Midlands.
Billings received from the employment of short-term staff fell moderately during July, according to surveyed recruiters based in the North of England. Where a drop was registered, this was attributed to a loss of clients and weakening business conditions.
Notably, the decline seen in the North of England compared with a fractional uptick at the overall UK level. In fact, the region registered the strongest reduction of the four monitored parts of England.
A renewed slowdown in job vacancy growth across the North of England was recorded in July.
While permanent job openings continued to rise, extending the current sequence of expansion which started two-and-a-half years ago, July’s upturn was the second-weakest seen over this period.
Temporary job vacancies rose only modestly during the latest survey period and at a slightly softer pace than seen across the UK as a whole.
Quickest rise in permanent staff supply since December 2020
The seasonally adjusted Permanent Staff Availability Index surged further above the 50.0 no-change mark in July and signalled the fastest improvement in permanent candidate numbers across the North of England since December 2020. Of the monitored English regions, only London registered a quicker upturn.
According to surveyed recruiters, redundancies and increased slack in the market led to greater staff availability.
Matching the trend in permanent staff availability, temporary candidate numbers rose at the fastest pace since December 2020 across the North of England during the latest survey period. Layoffs were mentioned as a reason for higher temp staff availability, although some surveyed recruiters noted that the candidates coming onto their books were lacking sought-after skills.
London was the only monitored English region to see a faster rise in temporary labour supply than the North of England.
Permanent salaries rise at joint-slowest pace since April 2021
Salaries awarded to new permanent joiners in the North of England once again increased during July. Efforts to attract highly-skilled workers underpinned higher pay offers, according to surveyed recruiters. While the rate of salary inflation remained sharp, it slowed to the joint-weakest in 27 months.
Nevertheless, the North of England recorded the fastest rise in starting salaries of the four monitored English regions once again in July.
Short-term staff in the North of England saw their hourly pay rates rise further during July, with the increase remaining strong overall. The pace of wage inflation ticked slightly higher, but held close to June’s 27-month low.
As was the case with permanent salaries, the North of England registered the strongest rise in short-term pay of the monitored English regions.
Neil Carberry, Chief Executive of the REC, said: “The jobs market in the North of England overall remains fairly robust with vacancies and pay still rising, and unemployment low across the UK but there is a sense in today’s report that the UK economy will need some growth soon to sustain this positive picture. Permanent hiring has been slowing all year. To some extent this is normalisation as the post-pandemic boom abates – but it is also driven by uncertainty. This is seen in the scale of companies reshaping themselves while hiring in other areas – recruiters report that the North saw the fastest improvement in permanent and temporary candidate numbers since December 2020 with some of this due to layoffs. But it is also obvious in the way firms are relying on temporary labour to keep things going in uncertain times. Temping keeps people in work when firms are uncertain about the future path of the economy – it is a huge UK success story.
“Hiring overall is still at a reasonable level, and some sectors remain under pressure from significant labour shortages, including blue collar and construction – so there is opportunity out there for job seekers. But today’s report emphasises again that sustained positivity in our labour market rests on economic growth and investment in the UK. A proper industrial strategy that tackles the big issues we face and which fully encompasses workforce thinking around skills, transport, access to work and immigration is long overdue.”
