A reduction in recruitment activity and redundancies reportedly drove the sharpest upturns in both permanent and temporary candidate numbers since last August. Rates of starting pay meanwhile increased for both types of workers. Starting salary inflation was only modest, however, while temp pay growth accelerated since March.
The KPMG and REC, UK Report on Jobs: South of England is compiled by S&P Global from responses to questionnaires sent to around 150 recruitment and employment consultancies in the South of England.
Commenting on the latest survey results Steve Hickman, Reading Office Senior Partner at KPMG UK, said: “After tentative signs that the job market had moved closer to stabilising in March, April saw a sharp reversal in the South of England’s labour market. Both permanent placements and temporary billings fell at their fastest rates since January, highlighting the persistent pressure businesses face from elevated employment costs and economic uncertainty.
“At the same time, candidate availability is rising fast, giving businesses a wider talent pool to draw from. While permanent starting salaries edged up only modestly, temporary pay is rising at pace, likely in response to minimum wage changes. For organisations in the South East, this creates an opportunity to attract skilled talent more affordably, investing in longer-term workforce development and building long-term resilience.”
Steeper fall in permanent staff appointments
Recruitment consultancies in the South of England signalled a sustained decline in the number of people placed into permanent roles in April. Notably, the rate of reduction accelerated to the sharpest seen since January. Surveyed firms often mentioned that weaker market conditions and higher employment costs had dampened hiring in April.
The South of England saw the steepest reduction in permanent placements of all four monitored English regions, while the softest decline was seen in London.
Adjusted for seasonal factors, the Temporary Billings Index remained below the neutral 50.0 mark to signal a sustained fall in billings received from the employment of short-term staff in April. Notably, the rate of contraction accelerated to the sharpest in three months. Anecdotal evidence indicated that employers had often cut back on temp staff hiring due to higher payroll costs and lingering uncertainty around the outlook.
Regional data indicated that temp billings fell across all four monitored English areas, led by the South of England.
Demand for permanent workers across the South of England fell at a sharp and accelerated pace in April. Moreover, the rate of reduction was the steepest seen since June 2020 and the sharpest of all four monitored English regions.
The downturn in temporary vacancies across the South of England also gathered pace in April, falling at the second-fastest rate since mid-2020. The rate of contraction was also sharper than those seen across the three other monitored English areas.
Quickest rise in permanent staff supply for eight months
As has been the case in each month since March 2023, the availability of staff for permanent roles in the South of England increased in April. Furthermore, the rate of expansion was the sharpest recorded since last August. The uptick was not as strong as those recorded across the three other monitored English regions, however. Redundancies were cited as the main driver of greater staff supply, while fewer overall vacancies were also mentioned as having pushed up candidate numbers.
Fewer job opportunities and company layoffs reportedly drove a further increase in temporary candidate supply in April. The rate of growth was sharp, having accelerated to an eight-month high.
Only the North of England recorded a stronger increase in temporary candidate availability in the latest survey period.
Further modest increase in starting salaries
Latest survey data pointed to a back-to-back increase in starting salaries across the South of England during April. The rate of pay growth was little-changed from that seen in March and only modest, however. Furthermore, the South of England saw the slowest increase in salaries of all four monitored English areas. The strongest rate of salary inflation was meanwhile seen in the Midlands.
Where higher permanent starters' pay was recorded, this was generally attributed by recruiters to an increase in the national minimum and living wage rates, but also efforts to secure skilled staff (that were often in short supply).
The seasonally adjusted Temporary Wages Index posted comfortably above the neutral 50.0 threshold in April to signal a sharp and accelerated rise in temp pay. There were widespread reports of employers upwardly adjusting their hourly pay rates due to stronger-than-average increases in the national minimum and living wage. Notably, the rate of inflation was the steepest seen for a year and outpaced those seen across the three other monitored English regions.
Neil Carberry, REC Chief Executive, said: “Given the bow wave of costs firms faced in April, maintaining the gradual improvement in numbers we have seen over the past few months is on the good end of our expectations for the UK. While we are yet to see real momentum build, hopes of an improving picture across the UK in the second half of the year should be buoyed a bit by today’s nationwide data.
“Recruiters in the South of England are actively struggling to fill some roles in key sectors such as accounting and finance, construction, hotel and catering, IT and engineering because of a lack of skilled workers, which is the story across most of the UK apart from London.
"Last week’s interest rate move is well-timed, offering some relief for businesses, with pay pressures now more contained.
“The biggest single drag factor on activity right now is uncertainty. Some of that can’t be helped, but payroll tax costs and regulation design is in the government’s gift. Businesses have welcomed positive discussions with Ministers on the Employment Rights Bill, but now it is time for real changes to address employers’ fears and boost hiring. A sensible timetable and practical changes that reduce the red tape for firms in complying with the Bill will go a long way to calming nerves about taking a chance on someone.”