The report illustrates a continued contraction in recruitment activities, with permanent staff appointments falling for 18 consecutive months. Recruiters cite economic uncertainty and persistent hiring freezes as pivotal factors driving this trend. Temporary billing also faced a downturn, largely attributed to budget constraints within organisations.
The latest KPMG and REC, UK Report on Jobs, reveals a continued decline in UK recruitment sector for March, with significant drops in permanent placements and temporary billings, the most notable since July 2020.
Despite slight increases in starting salaries, wage growth is slowing, and candidate supply is rising due to redundancies and cost-saving measures.
Despite a slight increase in starting salaries for permanent and temporary positions, the pace of growth has decelerated, hitting the slowest rate in over three years for permanent staff and a four-month low for temporary workers. This slowdown in wage inflation aligns with a surge in candidate supply, fuelled by increased redundancies and cost-saving measures across various sectors.
The negative trend in recruitment was uniformly observed across England, with the south facing the most significant contraction in permanent placements, and London noting a pronounced decline in temporary billings. While most sectors reported a fall in demand for permanent roles, engineering and blue collar sectors emerged as exceptions, showing resilience amidst the downturn. Conversely, the retail sector experienced the sharpest decline in demand for both permanent and temporary staff, the report added.
The data from March reveals a labour market under pressure, reflecting broader economic challenges.
Commenting on the latest survey results, Jon Holt, chief executive and senior partner of KPMG in the UK, said: “Persistent economic uncertainty has led to many business leaders delaying major investment decisions and relying on savings for growth during the first quarter of the year. But they are optimistic about the outlook improving.
“And while March’s survey data indicates ongoing weak demand in the labour market with a sharp rise in candidate availability, relatively low levels of UK unemployment together with falling inflation could pave the way for economic recovery.
“There are still headwinds, but it’s time for the UK economy to get its groove back – and UK businesses will be ready when the Bank of England makes its interest rate cuts. This may not lead to an instant rebound, but confidence to invest will increase, improving demand, and the economic outlook should start moving in the right direction.”
Neil Carberry, REC chief executive, said: “Economic growth has been sidelined for too long and must be at the heart of this year’s General Election campaign. Today’s data shows the economy in a holding pattern waiting for inflation and interest rates to ease, so that firms can get to investing. The decline in permanent placements has been steady for some months now, with temporary recruitment still robust, if falling back from the record highs of 2022-23. Employers appear to be leaning on temporary work while they are uncertain about the path of the economy. The data here should support a decision by the Bank of England’s Monetary Policy Committee to loosen its grip on growth in the near-term future.”
Fibre2Fashion News Desk (KD)
