UK employers reduce permanent staff hiring by most since mid 2020

UK employers reduce permanent staff hiring by most since mid 2020

British employers have reduced the number of new permanent staff they hire through recruitment agencies by the most since mid 2020 due to concerns about the economic outlook, leading to signs that the market is becoming tougher for job seekers.

A gauge of permanent staff hiring by the Recruitment and Beschäftigung Confederation and accountants KPMG fell to 42.4, the lowest since the 34.3 in June 2020 when the country was locked down due to the COVID-19 pandemic.

In July, the survey's measure of temporary staff hiring, which often rises when employers are cautious about the outlook, revealed the weakest growth in nine months - partly because more workers were looking for the security of permanent roles.

REC's chief executive, Neil Carberry, said the jobs market remained fairly robust despite the slowdown in permanent placements.

To some extend this is normalisation as the post-pandemic boom abates, but it is also driven by uncertainty, he said.

While new permanent staffing rose sharply, the rate of wage growth was the lowest since April 2021, REC said.

Claire Warnes, KPMG UK's partner of skills and productivity, said competition for skilled workers and cost of living pressures were keeping starting salaries high.

Monday's survey chimed with other indicators showing the labour market is loosening, welcome news for the Bank of England, which raised interest rates for the 14th meeting in a row to 5.25% last week and has been concerned about high wage growth.

The total number of jobless individuals in the three months to May was 4%, a 16-month high, but annual wage growth remained at a record high of 7.3% in cash terms.

Separately, BDO's separate figures showed rising interest rates, tough trading conditions and weak demand hit hiring plans and business confidence across services and manufacturing sectors.

In July, BDO's employment index fell for the first time in six months and its optimism gauge fell for the first time in four months.

REC said the availability of both temporarity and permanent workers to fill jobs hit the highest since December 2020.