JOB MARKET UPDATE: CANDIDATE SUPPLY GROWS AT QUICKEST PACE IN OVER FOUR YEARS AS HIRING SLOWS AGAIN"

Job Market Update: Candidate Supply Grows at Quickest Pace in Over Four Years as Hiring Slows Again"

Labour Supply Grows Rapidly, While Hiring Activity Slows Amid Economic Uncertainty

Key Findings:

• Labour supply surges at fastest rate since November 2020

• Permanent placements see sharpest drop in 22 months

• Wage growth slows for both permanent and temporary staff

Overview:

The latest KPMG and REC UK Report on Jobs, compiled by S&P Global, reveals that UK businesses have scaled back hiring in response to ongoing economic uncertainty and budgetary pressures. The report, based on responses from around 400 recruitment and employment consultancies, shows a marked slowdown in hiring activity in June. Permanent staff appointments fell sharply, recording their steepest decline in nearly two years, while the decline in temporary worker demand accelerated. Notably, the number of vacancies also dropped, with permanent roles being most affected.

Recruiters reported a significant uptick in the availability of candidates, with staff supply growing at the fastest pace since November 2020. This trend is attributed to rising redundancies and a reduced appetite for hiring. As candidate availability increased, coupled with tighter client budgets and lower demand, wage growth also slowed. Starting salaries and temporary wages saw only modest increases overall.

Hiring Activity Weakens Further in June:

The latest survey results indicate a notable decline in recruitment across the UK as companies remained cautious about their future business prospects. Permanent placements fell at the sharpest rate since July 2021, while temporary billings dropped at the fastest pace since February. Recruitment consultancies reported that companies were pulling back on hiring due to a mix of factors, including reduced confidence in the economic outlook and concerns over rising costs.

Candidate Availability Expands Rapidly:

In contrast to the slowdown in hiring, candidate availability surged in June. Recruitment agencies reported the sharpest increase in staff supply since November 2020, driven by redundancies and reduced demand for workers. The expansion of the candidate pool for both permanent and temporary roles was significant, though the increase in permanent labour supply was slightly more pronounced than for temporary workers.

Vacancies Decline at Faster Rate:

Demand for workers continued to drop, with overall vacancies falling more sharply than in May. The data revealed a significant decline in permanent vacancies, while the reduction in temporary job openings was more moderate. The demand for short-term staff was hit less hard, declining at the softest rate in the last ten months.

Wage Growth Slows:

Despite the surge in available candidates, pay growth remained subdued in June. Tightened client budgets and reduced demand for workers contributed to only a modest increase in starting salaries and temporary wages. Both pay categories saw inflation rates significantly weaker than typical levels, indicating reduced pressure on employers to raise compensation in this environment.

Regional and Sectoral Differences:

In June, permanent placements decreased across all regions in the UK, with the steepest drops occurring in the South of England. While the Midlands saw a slight uptick in temporary billings, other regions, particularly the South, experienced broad-based declines.

Sector-specific trends showed that retail faced the steepest drop in permanent staff demand among the eight sectors tracked. However, construction and engineering saw mild increases in permanent vacancies. In the temporary workforce market, retail and secretarial/clerical sectors also experienced the most significant declines. In contrast, construction recorded strong growth in temporary vacancies, marking the only sector with notable demand increases.

Orginal source from REC