Hiring "flickers back to life" as permanent placements rise

Hiring by UK employers picked up slightly in September, with permanent placements rising at the fastest pace for four years, according to the latest KPMG and REC Report on Jobs.

The survey of around 400 recruitment and employment agencies, compiled by S&P Global, found permanent placements rose for a second month in a row. Though the increase was marginal, it was the strongest in four years, supported by rising activity at employers and improved business confidence. Temporary billings also rose, though at the slowest rate for five months.

Pay growth slows

Starting salaries for permanent staff rose more slowly in September, the first slowdown in four months, and pay growth remained below its historical average. Recruiters said cost pressures and a growing supply of candidates were keeping a lid on salaries. Temporary pay also rose at its slowest rate for four months.

Vacancies and candidates

Overall demand for workers fell again, but at the weakest rate in just over two years. For the first time in more than two years, demand for permanent staff in the private sector rose.

The number of people available for work kept rising sharply, amid reports of redundancies and fewer job opportunities, although the increase was the slowest for three years.

Around the country

Three of the four English regions in the survey recorded higher permanent placements, led by the North of England. The South of England was the only area to see a fall. Temporary billings rose markedly in the North of England and the Midlands, while London saw a sharp fall.

IT and computing, and engineering, led the demand for permanent staff, while the sharpest falls in vacancies were in retail, and hotels and catering.

"A fragile recovery"

Jon Holt, chief executive of KPMG in the UK, said: "For the second month in a row we are seeing the jobs market starting to flicker back to life. But this remains a fragile recovery; and in some sectors it could be seen as an employer's market as the number of people looking for roles increases."

He said uncertainty over energy prices and higher borrowing costs were still headwinds, and that businesses wanted the Budget to bring "greater certainty in tax policy".

Maxine Bligh, interim chief executive of the Recruitment and Employment Confederation, said: "The permanent jobs market is revving its engine, with a second successive month of growth. The last time we saw a sustained run of growth in permanent placements was between March 2021 and September 2022."

"The Chancellor cannot seize this moment with talk of stability alone," she added. "Employers want to hear not just how we deliver stability, but how we go for growth."

What it means for jobseekers

For people looking for work, the picture is mixed. More employers are hiring than a few months ago, especially in technology and engineering, but there are also more candidates chasing each job, and pay offers are rising less quickly. The weakness in retail and hospitality is a particular concern for young people, who often find their first jobs in those sectors. In Birmingham, where the Centre for Cities estimates 45,000 young people are not in education, employment or training, that matters.