The latest KPMG and REC, UK Report on Jobs: North of England survey pointed to a continued downturn in hiring activity across the region during February.
However, the rates of decline for both permanent placements and temp billings eased from January. Vacancies for both permanent and short-term staff also fell at softer, but still sharp rates.
The latest survey also indicated that starting salaries fell for the first time in four years during February, in part due to a substantial rise in permanent staff availability.
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.
The number of people placed into permanent roles decreased for the twentieth month in a row across the North of England in February. Recruitment companies linked the sustained decline in appointments to client hesitancy and a subsequent drop in vacancies, in part due to the incoming National Insurance increase. Although still marked, the downturn eased notably from January’s 55-month record. For the second month in a row, the North of England recorded the sharpest drop in permanent placements of all four monitored English regions.
February survey data pointed to a fourth consecutive monthly decrease in temp billings across the North of England. The decline reflected reduced demand for temporary staff, according to recruiters. Though solid, the rate of contraction was noticeably the softest over the aforementioned sequence of decline. Of the four monitored English regions, only the Midlands posted a slower contraction in temp billings than that seen in the North of England.
The North of England’s downward trend for job vacancies extended into February for both permanent and short-term staff. Permanent job openings decreased rapidly, albeit with the rate of contraction easing on the month. The pace of decline in temp vacancies likewise slowed in February. Job openings for temporary staff fell at a solid pace, but one that was noticeably softer than that seen in January.
Latest data pointed to a further increase in permanent staff availability across the North of England, thereby stretching the current period of expansion to 14 months. The rate of growth was substantial and considerably faster than in the previous survey period. Recruiters linked the rise in permanent staff supply to challenging job market conditions, including redundancies. That said, the increase in the North of England was softer than the UK average.
The upward trend registered for the supply of short-term staff in the North of England was extended to two years in February. Panellists noted that company layoffs and reduced demand for temp staff had boosted candidate numbers. Although steep, the pace of expansion was slower than that seen on average over this two-year period. Of the four monitored English regions, only London registered a faster uptick in temporary staff availability during February.
The seasonally adjusted Permanent Salaries Index dropped below the crucial 50.0 mark for the first time in four years in February, to signal a renewed decrease in starting salaries across the North of England. Two of the four monitored English regions posted reductions in pay, the North and the South. That said, the rates of decrease were only mild and fractional, respectively.
Short-term staff in the North of England saw their hourly pay rates rise further during February. With the respective seasonally adjusted index posting just above the neutral 50.0 mark, the uptick was the weakest seen over the current 15-month sequence of pay growth and only slight, however. The North of England posted a softer increase in temp wages than those seen in the Midlands and London. Meanwhile, the South of England recorded no change to temp pay rates.
Commenting on the latest survey results, Chris Stott, Manchester Office Senior Partner at KPMG UK, said:
“The job market in the North remains challenging, with permanent staff placements declining for close to two years now. Although the rate of contraction has eased slightly since January, hiring hesitancy persists as firms continue to manage costs amid sluggish growth.
“The first drop in starting salaries in four years reflects a significant rise in candidate availability, driven by redundancies and shifting market conditions. With more candidates entering the market due to restructuring, competition for available roles is increasing.
“There are, however, reasons for optimism on the horizon. The pace of decline in hiring activity has eased, suggesting that businesses are selectively investing in talent for key roles. Firms’ investment in long-term strategic planning will be crucial in shaping a more resilient job market in the coming months.”
Neil Carberry, REC Chief Executive, said:
“After a long winter, there are some hints of a turn in the labour market in the UK as we head into Spring. This is led by the private sector across the UK – despite recent tax rises – and that should not be missed. The downturn in the North eased significantly from January’s 55-month record and the rate of contraction was noticeably the softest for four months in the region.
“Enabling companies to grow is at the heart of our prosperity – the Chancellor must use the Spring Statement to build their confidence in growth. At the moment, though, things are still slow as companies hold their breath in the face of significant costs rises from April with changes to National Insurance and the National Living Wage. Getting the Industrial Strategy flying is a key part of this – for the whole economy, not just key sectors – as is addressing policies in the Employment Rights Bill so they do not prove to be a brake on growth.
“Despite a long slowdown, the North still face skill shortages. This comes from mismatches, training gaps and the impact of an ageing population. Addressing productivity through technology and better management will be critical to addressing this, and recruitment firms will be key partners for businesses in changing their approach. Pay growth is easing and broadly unchanged across much of the country which should please the Bank of England rate setters.”
