The jobs market in the North of England has remained under pressure, according to the latest KPMG and REC, UK Report on Jobs: North of England survey data.
Demand for workers weakened, as reflected by an accelerated drop in vacancies. As a result, hiring activity for both types of staff contracted, again at sharper and historically elevated rates. This triggered a cooldown in pay growth.
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 hiring activity intensifies further
January survey data showed that permanent staff placements fell at a substantial and accelerated pace in the North of England. This marked the fifth decrease in the respective seasonally adjusted index in consecutive months, to its lowest since June 2020.
Surveyed recruiters linked the downturn to reduced vacancies, hiring hesitancy amid post-budget uncertainty and elevated staffing costs. Though all four monitored English regions posted substantial decreases in permanent staff appointments, the North led the downturn in January.
Recruiters in the North of England registered a third straight month-on-month decrease in their billings received from temporary employment in January. The decline reportedly reflected a lack of recruitment activity following the 2024 Autumn budget. Having re-accelerated in January, the rate of contraction in temp billings was steep across the region and in line with the UK trend.
January data pointed to a third consecutive monthly decrease in job openings for both types of staff across the North of England. The substantial decline in permanent vacancies seen across the region was the strongest for nearly four-and-a-half years. The rate of contraction was also the most pronounced across the four monitored English regions.
Temp vacancies fell at the quickest rate since June 2020 in the latest survey period and at a stronger rate compared to the UK average.
Softer increase in permanent staff supply in January
There was a further rise in permanent staff supply in the North of England in January, thereby stretching the trend of growth to just over one year. Though strong, the rate of expansion was the weakest seen over this period.
The increase reportedly reflected a challenging jobs market and a subsequent rise in redundancies. The local uplift in permanent staff availability was the joint-softest of the monitored regions, matching that seen in the South of England.
Recruitment agencies in the North of England signalled a further rise in availability of short-term staff in January, thus marking a near two-year run of expansion. The rate of growth in temporary staff supply was steep and the joint-strongest in just over four years (equal with October 2024).
Panellists linked the uptick to a hiring slowdown and a rise in redundancies. For back-to-back months, the North of England posted the fastest increase in temp staff availability seen regionally.
Below average starting salary inflation cools further in January
Salaries awarded to new permanent joiners across the North of England rose moderately in January, marking nearly four years of wage growth. The rate of increase was the weakest for three months and noticeably softer than the average seen since starting pay began rising in early 2021.
Where growth was reported, panellists mentioned a rise in placements for senior roles and increased pay offers to secure candidates. Moreover, the local rate of inflation was slightly faster than the UK average.
As has been the case on a monthly basis since the end of 2023, there was a further rise in hourly wages across the North of England in January. The local rate of temp pay inflation was only marginal and the softest seen across current run of growth, but nevertheless stronger than the UK average, in part due to a sharper drop in temp rates in the South of England.
Phil Murden, Leeds Office Senior Partner at KPMG UK, said: “The challenges within the job market show little sign of easing, with permanent staff placements in the North now slumping at the fastest pace since during the COVID-19 pandemic when hiring had all but stopped. We’re seeing a combination of declining vacancies and an increase in staff supply that’s making it a difficult climate for jobseekers.
“Hiring hesitancy has persisted into 2025 fuelled by firms keeping the impending employers National Insurance rate rise in mind as they approach the new tax year.
“There are small bright spots at the top end of the market, with some businesses continuing to invest in top talent for senior roles – a positive indication that businesses are more readily thinking about their longer-term strategies. Our recent KPE Barometer bears this out, with Yorkshire businesses looking to focus investment on delivering new products and services which will demand the skills and experience that senior top talent provides.”
Neil Carberry, REC Chief Executive, said: “Businesses entered the year uncertain on the growth path, and that has driven a ‘wait and see’ approach to hiring. Around the country, REC members report that clients have plans and are hopeful for the year ahead – but firms are slowing investment until they see more momentum in the economy.
“Salaries awarded to new permanent joiners across the North rose moderately in January and the local rate of temp pay inflation was only marginal. Last week’s move on interest rates was timely as a way of boosting confidence. The more central role of growth in Government thinking since the Chancellor’s speech last month will also help. But it takes time, and real action, to build business confidence.
“An autumn of fiscal gloom, difficulty navigating significant upcoming tax rises and little progress on the practicalities of a costly new approach to employment rights are all acting as brakes on progress. As well as the monetary stimulus to growth, it’s time for greater clarity on how the Government will use its industrial strategy to drive the growth of the whole economy.”
