The latest KPMG and REC, UK Report on Jobs: South of England survey pointed to a relative improvement in recruitment trends across the region in October.
Although falling solidly overall, permanent placements fell at the slowest rate in two years, while temp billings declined at the weakest pace in 21 months. Nevertheless, recruiters noted that a weak economic climate, higher staff costs and uncertainty stemming from the upcoming government Budget had impacted hiring decisions.
Furthermore, vacancies fell markedly for both permanent and temporary positions across the region. Combined with reports of redundancies, staff availability continued to rise sharply. On the pay front, starting salaries declined fractionally in October, while temp pay rates fell at a quicker pace.
The KPMG and REC, UK Report on Jobs: South of England is compiled by S&P Global from responses to questionnaires sent to around 150 recruitment and employment consultancies in the South of England.
Permanent placements decline at slowest rate in two years
The seasonally adjusted Permanent Placements Index continued to move closer to the neutral 50.0 value in October, to signal a weaker reduction in permanent staff appointments across the South of England. Though solid, the rate of contraction was the weakest in two years. Surveyed recruiters noted that low confidence amongst employers, often due to weaker economic conditions and the upcoming government Budget, had weighed on permanent staff hiring. A marked, but weaker reduction in permanent placements was also seen at the UK level, with the decline slightly steeper than that seen in the South of England.
On a regional basis, the North of England recorded the sharpest drop in permanent staff appointments in October, while the slowest was seen in London.
Billings received by South of England based recruiters for the employment of temporary workers continued to decline in October, thereby extending the current sequence of contraction to 21 months. That said, the rate of reduction was the weakest seen over this period and only modest. Nevertheless, the decline contrasted with a slight upturn in temp billings at the national level. Fewer job opportunities and a subdued economic climate had dampened billings in the latest survey period, according to recruiters.
Trends diverged across the four monitored areas of England, with temp billings rising solidly in the Midlands and slightly in the North of England. London was the only other region to register a reduction, though here too the rate of contraction eased notably from September.
Vacancies for permanent and temporary roles in the South of England fell at identically sharp rates at the start of the fourth quarter. Whilst this represented the weakest decline in demand for permanent staff for five months, the reduction in temporary positions was the sharpest seen since April.
The South of England recorded the most pronounced drops in staff demand of all four monitored areas of England.
Growth in permanent labour supply eases only slightly
Recruiters based in the South of England signalled an increase in the availability of staff for permanent roles for the thirty-second straight month in October. Although growth eased further from August’s post-pandemic high, it remained substantial overall. Redundancies and weaker demand for staff was linked to the latest rise in candidate numbers.
The South of England recorded the steepest upturn in permanent labour supply of all four monitored English regions.
The availability of temporary staff across the South of England expanded again in October, thereby extending the current period of growth to two-and-a-half years. The pace of increase slowed only slightly from September’s multi-year peak and was among the quickest seen since the COVID-19 pandemic. Fewer contract roles and company layoffs were often cited by panellists. For the second month in a row, the South of England saw the quickest rise in candidate numbers of all four monitored English areas.
Fractional fall in starting salaries
Permanent starters’ salaries in the South of England fell at a slower and only fractional pace in October, as signalled by the respective index rising close to the neutral 50.0 level. Nevertheless, this contrasted with a further slight increase in salaries at the UK level. According to recruiters, pay trends were relatively subdued amid weaker hiring activity and improvements in candidate availability.
Starting salaries also fell in the North of England, and at a solid rate, whilst modest upturns were seen in the Midlands and London.
Average hourly rates of pay for short-term staff in the South of England fell for the fourth straight month in October. Though modest, the rate of reduction was the quickest seen since July and contrasted with the survey’s long-run trend of strong growth.
Where lower pay rates were recorded, recruiters generally linked this to a combination of lower demand for workers and increased supply.
Temp wages also fell in the North of England, while softer increases were seen in the Midlands and London.
Commenting on the latest survey results Steve Hickman, Reading Office Senior Partner at KPMG UK, said: “October’s figures show encouraging signs for the South’s recruitment market, with permanent placements falling at their slowest rate in two years. However, the region’s continued position as the weakest performer across England for staff demand points to deeper confidence issues, with employers holding back on hiring decisions ahead of the Autumn Budget later this month, and amid a backdrop of ongoing economic uncertainty.
“The disconnect emerging in the market is striking. Candidate availability is on the rise, driven partly by redundancies, yet hiring remains subdued and pay pressures have softened notably. For South East businesses willing to look beyond near-term uncertainty, this creates an opportunity to access quality talent at more competitive rates and build capability for when conditions improve.”
Neil Carberry, REC Chief Executive, said: “Today’s data reflects the more positive outlook we have been hearing from recruiters since the start of the autumn. They aren’t exuberant – partly because the all-important London market and the South of England are lagging the upward curve. This may change soon in the South of England, with a weaker reduction in permanent staff appointments and temp billings than in recent months.
“But we have been here before – there was a similar mood in the UK jobs market before the Chancellor’s Halloween Budget last year. The huge surprise increase in payroll taxes then shocked the market and we have seen the results of that, as businesses predicted then, in higher unemployment and redundancy. As we go into Budget 2025, there can be no repeat. If Government cares about growth, as it claims, measures must stoke business investment, not deter it.
“There is a broader base of demand forming in the South of England, from accounting and finance to blue collar and the bellwether sector of construction. The Budget must give employers confidence to invest, with a focus on unlocking potential through delivering on skills reform, supporting business investment and reforming the approach to the Employment Rights Bill, which needs a dose of practicality and realism.”
