(Sharecast News) – Recruitment eased in the UK last month, a survey showed on Friday, with the number of workers hired through agencies falling at the steepest rate for more than three years.
According to the latest UK Report on Jobs from the Recruitment and Employment Confederation, the trade body, and KPMG, the hiring of permanent staff fell by the most since June 2020. The permanent staff placements index was 38.9, down from 42.4 in July and well below the 55.3 it averaged in 2022.

Spending on temporary workers also eased for the first time since July 2020.

Overall vacancy growth softened for the sixth successive month, as the number of permanent vacancies increased “only fractionally”.

The overall availability of candidates, meanwhile, expanded for the sixth straight month, although the rate of improvement slowed slightly from July. Respondents said redundancies and a general slowdown in hiring activity was behind the rise in labour supply.

Starting salaries and temporary wages also rose sharply, as stiff competition for the best candidates and the high cost of living prompted employers to up pay. The rate of starting salary inflation edged down, however, to the joint weakest level since March 2021.

KPMG partner Claire Warnes said: “The economic outlook is keeping businesses cautious. Many employers aren’t ready to commit to permanent roles, and those who are indicate that they cannot find candidates with the right skills, causing these placements to fall at a rapid pace.

“Temporary billings slipped for the first time since July 2020, as squeezed budgets mean there is little room to bring on short-term staff.”

Neil Carberry, chief executive of REC, said: “August is always a slower month for new permanent roles, but this has been exacerbated by the lack of confidence to start the new hiring we saw among firms in the spring.

“As inflation begins to drop, it is likely that firms will return to the market later in the year – employer surveys suggest confidence may be returning. But for now, the labour market has more slack than it has since the heights of the first lockdown.”

Gabriella Dickens, senior UK economist at Pantheon Macroeconomics, said: “August’s survey provides more ammunition to [Bank of England] governor Andrew Bailey and chief economist Hugh Pill, who have recently expressed their view that interest rates probably don’t need to rise much further, if at all, to sustainability return CPI inflation to the 2% target.

“We think employment likely will flatline in the second half of this year. That should mean that the upward trend in the unemployment rate is sustained, given that the growth in the workforce will remain supported by immigration.”

The survey of around 400 UK recruitment and employment consultancies was carried out between 10 and 24 August.

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