Hiring conditions remained challenging in December, according to the latest KPMG and REC, UK Report on Jobs: North of England survey.
Permanent placements were down at the quickest rate seen since mid-2020, while there was a sustained rapid drop in temp billings. At the same time, vacancy trends turned more negative in December and the supply of workers increased at a quicker rate on the month.
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.
Decline in permanent placements deepens in December
The seasonally adjusted Permanent Placements Index fell further into contraction territory in December, to signal a substantial drop in permanent staff appointments across the North of England. The rate of decline was the fastest seen in four-and-a-half years and the second-quickest regionally, surpassed only by the South where the downturn was slightly faster. Survey respondents linked the contraction to reduced vacancies and increased hesitancy among firms to hire following the Autumn Budget.
December data pointed to a second successive monthly decrease in temp billings across the North of England. A drop in demand for short-term staff and the non-renewal of contracts drove the latest downturn, according to respondents. Though slower than November’s recent record, the rate of decline in December was nevertheless strong and faster than that seen for the UK overall.
As in November, December saw a further drop in the number of job vacancies for both types of staff across the North of England. The trend for permanent job openings turned more negative in December. The decrease was marked and the quickest since August 2020. Regionally, the South of England and the Midlands recorded a faster drop in permanent vacancies than that seen locally. Meanwhile, temp vacancies fell solidly and at the quickest rate seen for four-and-a-half years in December.
Further substantial rise in permanent staff supply
There was another substantial boost to permanent staff availability in the North of England in December, thereby stretching the current run of uplifts to exactly a year. The latest increase was linked by recruiters to a rise in redundancies and skills mismatches. The local pace of expansion accelerated to its strongest for seven months and remained faster than the UK average.
Recruiters based in the North of England signalled a further robust rise in temporary staff supply during December, thereby extending the current trend of growth to 22 months. Panel members often linked the improvement in the availability of short-term staff to the ongoing market downturn. The local uplift in temp staff availability in December was more pronounced on the month and slightly stronger than the UK average.
Strongest rate of starting salary inflation for four months
Recruitment consultancies in the North of England pointed to another monthly increase in permanent starting salaries in December, thereby extending the current sequence of growth to nearly four years. The respective seasonally adjusted index rose in each month of the final quarter, placing the rate of inflation at a four-month high that was strong overall. Panellists linked the rise to increased competition for skilled staff. Of the four monitored regions, only London posted faster salary growth than that seen locally.
December survey data signalled a thirteenth consecutive monthly rise in short-term wages across the North of England. Amid another marked increase in the availability of temporary staff, the rate of inflation was only marginal and subdued by historical standards. The rate of temporary pay growth across the North of England was largely in line with the UK trend in December.
Phil Murden, Yorkshire Office Senior Partner at KPMG UK, said: “The steepest drop in permanent hires since mid-2020 shows Yorkshire businesses continue to navigate a complex labour market.
“This, compounded by a broadening gap between supply and demand of permanent and temporary staff points to a challenging outlook for 2025. It’s clear that many businesses remain cautious about hiring.
“That said, a new year brings new opportunities and with recruitment consultancies reporting the strongest rate of starting salary inflation in December, 2025 could see an uplift in skilled staff hires to drive growth plans.”
Neil Carberry, REC Chief Executive, said: “This report emphasises a weak mood in some businesses as they built their budgets for this year, and made changes designed to save on costs after a tough Budget. That said, sentiment can change quickly. There was a softer drop in temp billings signalled in the North.
“December is always a hiring low point, and a new year brings new hope – with inflation under control, low unemployment and economic growth expected, the fundamentals are better than many appreciate.
“It is what happens now, as firms return to the market in January, that will decide the path ahead. Recruitment is one to watch in early 2025 because it is one of the earliest indicators of a broader economic recovery, with any sign of a turn hugely significant with the sector contributing a massive £44.4bn to the UK economy in 2023.”
