The latest KPMG and REC, UK Report on Jobs: North of England survey showed that recruitment activity in August fell at a softer rate across the region compared to July. The decline in permanent placements remained stronger than that seen for temp billings.
After having increased in July, starting pay for both permanent and temporary staff decreased in August. Weaker pay trends coincided with the sharpest upturns in candidate availability since 2020 and a sustained fall in job vacancies.
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.
Softest decline in permanent placements in three months
Recruitment consultancies in the North of England signalled a further decrease in permanent staff appointments in August, thereby extending the current period of decline to 26 months. Panellists noted a general drop in hiring activity as some companies were reportedly hesitant to take on new staff. The rate of contraction eased to the weakest since May, but nevertheless remained substantial and was slightly quicker than the national average.
August survey data signalled a tenth successive monthly decrease in billings received from the employment of temporary staff in the North of England. Survey respondents linked the latest drop in temp billings to reduced demand for short-term staff, challenging economic conditions and tighter client budgets. Though solid, the pace of contraction was the slowest in three months and broadly in line with the wider UK trend.
August marked the tenth month in a row in which vacancies for both permanent and temporary roles had fallen across the North of England. However, in both cases, rates of decline lost momentum in the latest survey period. Nevertheless, demand for both types of worker fell solidly overall. The decrease in permanent job openings across the North of England was slower than those seen across the three other monitored English regions. Meanwhile, short-term vacancies fell at a rate that was slightly softer than the UK average.
Rapid rise in permanent staff supply in August
The seasonally adjusted Permanent Staff Availability Index rose further above the 50.0 no-change mark in August, to signal a rapid increase in permanent staff supply across the North of England. Moreover, the rate of expansion was the fastest seen since October 2020. It was also the strongest of all four monitored English regions. Where recruiters noted a rise in candidate availability, they generally attributed this to redundancies and fewer job opportunities.
August survey data revealed a further rise in the number of people available for temporary roles in the North of England. The rate of growth was the most pronounced since November 2020 and rapid overall. The upturn in permanent candidate numbers was the second-strongest of the four English regions monitored by the survey, behind only London. Restructuring efforts and a general reduction in demand for temporary staff were noted by panellists as driving the latest uptick in labour supply.
First fall in starting salaries since March
The seasonally adjusted Permanent Salaries Index fell below the crucial 50.0 mark for the first time in five months in August, to signal a fresh reduction in salaries awarded to permanent joiners in the North of England. Though modest, the rate of contraction was the most pronounced since December 2020. At the same time, starting salaries rose at the weakest rate in four-and-a-half years at the national level. Weaker demand for staff and recent increases in payroll costs had dampened salaries, panellist reports showed.
Average hourly rates of pay for temporary staff in the North of England decreased for the second time in three months in August, as signalled by the respective seasonally adjusted index posting below the 50.0 mark. The rate of reduction was softer than that recorded in June, however, and only marginal. On a regional basis, only the North and South of England registered lower rates of temp pay, while increases were recorded in London and the Midlands.
Commenting on the latest survey results, Phil Murden, Leeds office senior partner at KPMG UK, said: “We’re seeing encouraging signs that the North’s jobs market is beginning to stabilise, with the slowdown in hiring starting to ease. Businesses are still cautious, but employers now have access to the widest talent pool we’ve seen since 2020, posing a real opportunity to strengthen teams and bring in fresh skills.
“While starting salaries for permanent roles dipped in August, this reflects a recalibration after recent cost pressures, rather than a lack of demand for talent. Employers are wisely focusing on building resilient teams, investing in the right people, at the right time, to build a workforce fit for the future.”
Neil Carberry, REC chief executive, said: “Employers need a shot of confidence along with their seasonal flu jabs this autumn. August saw recent declines in the market moderating, and a few positive signs. Overall, in the North, the rate of contraction in permanent placements eased to the weakest since May and the pace of reduction in temp billings was the slowest in three months.
“There is certainly potential out there – but with fewer vacancies and more candidates looking for work across the UK, the overall picture is still subdued. While we have seen a summer slowdown, we will hopefully see more positive signs when the September data come through next month.
“All eyes are now on the Autumn Budget, in hope now that the Chancellor won’t do any further damage to the labour market with costs on hiring. For the economy to thrive, the Budget must recognise the need for investment in people. Long-term investment in skills, workforce stability, a more practical approach to the Employment Right Bill and meaningful partnerships with employers will yield far more enduring returns than short-term fixes.”
