The latest KPMG and REC, UK Report on Jobs: North of England survey saw recruitment trends diverge again in October. There was a steeper reduction in permanent staff appointments, while temp billings rose fractionally in October.
There were signs that staff supply continued to outweigh demand. Staff availability rose substantially again, while vacancy growth remained subdued by historical standards. With that, October signalled only marginal increases in pay for both types of staff across the North of England.
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.
Sharpest decline in permanent staff appointments since June
As has been the case in each month since July 2023, the number of staff placed into permanent roles in the North of England declined in October. The rate of contraction was not only marked, but the quickest seen for four months. Recruiters in the region blamed caution surrounding the impending Autumn Budget and fewer job vacancies. The drop in permanent hiring activity was widespread across all four monitored English regions. Only London recorded a slower decrease than that seen locally.
After just a brief period of decline in September, the seasonally adjusted Temporary Billings Index posted above the crucial 50.0 mark in October, to signal a rise in billings received from the employment of temp staff in the North of England. Though the rate of expansion was only fractional, it compared favourably against the UK average, where a contraction was registered. Only the Midlands recorded a faster increase in temp billings than in the North of England.
There were only fractional increases in job vacancies for both permanent and temporary positions across the North of England in October.
October survey data showed that although permanent vacancy growth was sustained for an eighth successive month, it was indeed the slowest in the sequence. Though only fractional, temp vacancy growth rebounded after a month of decline in September.
Permanent labour supply rises at softer, but still substantial rate
There was a further sharp rise in permanent staff availability across the North of England in October, thereby extending the current run of expansion to ten months. According to anecdotal evidence, labour supply was pushed up due to subdued hiring conditions and increased redundancies. Although the rate of growth was the slowest seen since February, it remained faster than the UK average.
October survey data pointed to a sustained increase in the availability of workers for short-term roles across the North of England. As well as steep, the rate of expansion accelerated to the strongest for nearly four years. The local increase in temp staff supply was largely in line with the UK-wide trend in October.
Marginal rise in permanent starting salaries in October
Recruitment consultancies based in the North of England recorded a further rise in salaries awarded to new permanent joiners, as has been the case since March 2021. The rate of inflation picked up slightly from September’s three-and-a-half year low, but was nevertheless only marginal.
Though the North of England was the only monitored region to see starting salary pressures build, the upturn remained softer than the UK average.
The seasonally adjusted Temporary Wages Index posted above the neutral 50.0 mark in October, to signal an eleventh consecutive monthly increase in temp wage rates across the North of England. That said, the rate of inflation was the softest in the aforementioned sequence and slightly slower than that seen at the UK level.
Phil Murden, Leeds Office Senior Partner at KPMG UK, said: “Permanent hires have been declining for over a year, and the speed of contraction in October does paint some concern in the North.
“Many firms in the region will have delayed their recruitment plans in advance of the Autumn Budget, which is likely to have prompted pause for thought.
“The increase in National Insurance announced by the Chancellor provides a further cost consideration for management teams. Nonetheless we hope to see more Yorkshire firms now looking to enact their recruitment plans for 2025 benefiting from more certainty and clarity.”
Neil Carberry, REC Chief Executive, said: “These figures are a timely reminder that demand from employers for new staff has weakened since the election – though the overall picture in the UK remains resilient by comparison to pre-pandemic.
“There is a positive sign for The North with temp vacancy growth rebounding after a month of decline in September and an increase in permanent vacancies. But things now stand in the balance – firms need to be persuaded to invest, with recent changes to NI thresholds, the minimum wage and prospective changes to employment law all causing concern.
“Firms will be looking for the Government to deliver a clear, stable growth plan and detailed regulatory changes that enable firms rather than put them off over the next few months. Temporary work in particular is a fantastic way of helping people take steps out of inactivity, and the threat of new employment laws undermining opportunities for workers must be addressed.
“The very marginal increase in salaries in October and weakest rise in temp wages for nearly a year in the North suggests the Bank of England should not step back from further cuts to interest rates, which will also boost business confidence. And data on shortage sectors across the UK is a timely reminder that delivering on a skill strategy that is aligned to business needs is one of the biggest things Government and businesses could achieve working together.”
