Report reveals effect of uncertainty on hiring plans

Brexit uncertainty has continued to take its toll on hiring, with activity remaining muted in May.

This is according to the latest Recruitment & Employment Confederation/KPMG UK ‘Report on Jobs’. 

The findings of this month’s report, compiled by IHS Markit, reveal permanent placement numbers fell for the fourth time in the past five months in May, and at a quicker pace than in April, while temp billings increased only marginally, hitting levels not seen since 2013. Survey respondents also indicated hiring activity was dampened by uncertainty, though demand for staff had weakened compared to earlier in the year.

While agencies signalled a slightly stronger rise in overall vacancies during May, growth remained close to April’s 80-month low. And although both permanent and temporary job openings increased solidly, rates of increase remained notably weaker than historical averages.

Ongoing Brexit-related uncertainty and generally tight labour market conditions were cited as contributory factors affecting candidate availability during May, while both permanent and temporary staff supply declined at faster rates than in April.

While pay awards to permanent starters continued to grow sharply in May, the rate of inflation was the least marked for just over two years. In contrast, temp wages increased at their quickest pace for six months, with respondents citing competition for scarce workers as a contributory factor.

Three of the four monitored English regions indicated lower permanent staff appointments, with the Midlands witnessing the quickest rate of decline. The North bucked the overall trend indicating a marked increase in permanent placements. While temp billings expanded in the South of England and in London during May, a further decline was seen in the Midlands, while the North of England registered the first reduction since January.

Demand for permanent staff remained strongest in IT & computing, closely followed by engineering, while the only two monitored sectors to register lower permanent job vacancies were construction and retail.

While nursing/medical/care saw the sharpest increase in temporary staff demand, a marked expansion in vacancies was also seen for hotels & catering. In contrast, demand for temp workers was down in the construction, retail and executive/professional sectors.

Commenting on the latest survey results, Neil Carberry, REC CEO, said: “The jobs market is still creating opportunities for those looking for work. With vacancies rising and starting salaries going up sharply, it is worth people talking to recruiters about that next step in their career. Sectors like IT, engineering and healthcare are hiring strongly, while the North of England showed the best performance in terms of regions.

“Overall, though, the survey again shows what uncertainty does to hiring plans. Total permanent placements fell again this month, while temporary billings grew only marginally. Recruiters are reporting that demand for staff is slowing and their clients are reducing business activity on average. Worryingly, these trends are most pronounced in key sectors like retail and construction.”

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