Permanent staff appointments fall at softer pace in September

Jo Thompson Recruitment contributes to the Report on Jobs, a comprehensive guide on the UK labour market that is drafted by KPMG and the Recruitment & Employment Confederation (REC), compiled by IHS Markit. The monthly report is built upon survey data from recruitment consultancies and employers, who share insights on the latest and most pressing labour market trends for the UK.

In the latest UK Report on Jobs, the REC, KPMG, and IHS Markit recorded that permanent placements decline at weakest rate in three months and temp billings return to growth. Pay pressures ease as staff supply continues to increase.

Commenting on the latest survey results, Claire Warnes, Partner, Skills and Productivity at KPMG UK, said:

“A concerning feature of this month’s data is that demand for staff is losing momentum, with total vacancies falling for the first time since February 2021 amid a fresh reduction in permanent vacancies. While both reductions are slight, employers are clearly nervous due to the long-term economic uncertainty and budget constraints that are impacting businesses everywhere. This in turn is leading to a continued reliance on temporary staff.

“For several months, strong pay growth has been a consequence of a tight labour market. But strains on employers’ budgets are now affecting the rate of starting salary inflation which is at a two-and-a-half year low, while temporary wages increased at the slowest rate in 31 months.

“Skill shortages across a range of sectors – from permanent IT staff to temporary nursing roles – also continue to be an area of long-term concern for the economy.

“The labour market is starting to look slightly precarious again and recruiters will be wondering and hoping that the recent slight calming of inflation rates positively impacts the outlook for both employers and jobseekers.”

Neil Carberry, REC Chief Executive, said:

“Employers tell us they are feeling better about themselves as the year moves on, and today’s data does suggest the possibility of a turnaround in hiring over the next few months. Permanent placements have been falling for a year now from abnormal post-pandemic highs. While permanent hiring activity continues to slow, fewer firms reported a slowdown last month, leading to a much shallower rate of decline than most months recently. Likewise, temporary hiring remains robust with billings growing marginally in September – as they have most months this year.

“This feels like a market that is finding the bottom of a year-long slowdown. And the relative buoyancy of the private sector is likely to be driving this more positive outlook – while vacancies are now dropping, they remain robust in the private sector by comparison to the public. Some sectors such as hospitality, engineering, logistics and healthcare continue to experience very strong and growing demand. Along with high inflation, this is likely to be contributing to the growth of pay for temps and perms alike.

“As we move towards the Autumn Statement, action to help people find high quality roles is essential as the picture varies so widely from sector to sector. The REC would like to see a focus on skills, finally reforming the system to deliver a mix of high-quality courses within the levy framework, and action to tackle inactivity – like extending the Restart programme which has helped recruiters place thousands of long-term unemployed people into work. Both of these could form part of a long-overdue people and growth strategy. From reforming government procurement to better and more effective regulation, there is a lot government could do in partnership with recruiters to drive growth and prosperity.”

Executive Summary

The Report on Jobs is unique in providing the most comprehensive guide to the UK labour market, drawing on original survey data provided by recruitment consultancies and employers to provide the first indication each month of labour market trends.

The main findings for September are:

Downturn in permanent staff hiring eases, temp billings rise

Recruitment consultancies across the UK signalled a softer, but still solid decline in permanent staff appointments during September. According to panellists, companies remained hesitant to commit to new permanent hires due to ongoing economic uncertainty and efforts to control costs. A preference for short-term staff meanwhile supported a fresh rise in temp billings at the end of the third quarter.

Softer increases in starting pay

September survey data pointed to a further easing of overall pay growth across the UK. Though sharp, the rate of starting salary inflation edged down to a two and-a-half-year low, while temp wages increased at the slowest rate in 31 months. While competition for skilled workers and the higher cost of living continued to place upward pressure on pay, there were some reports of greater strain on clients’ budgets.

…amid further improvement in candidate availability

The overall availability of candidates improved again in September. Although the pace of expansion softened further from July’s recent high, both permanent and temporary labour supply increased at historically strong rates. Anecdotal evidence generally linked the latest upturn to redundancies and a slowdown in market conditions.

Overall vacancies fall slightly in September

Total vacancies slipped into contraction territory in September, marking the first fall in overall demand for staff since February 2021. The rate of contraction was only marginal, however underlying data revealed a fresh reduction in permanent vacancies, albeit one that was slight, while growth of demand for temp staff moderated to a four-month low.

Focus on the South of England – Hiring activity across the South of England continues to fall in September

In the latest UK Report on Jobs, the REC, KPMG, and IHS Markit recorded that permanent placements and temp billings decline, whilst there was a rapid increase in temp staff availability. Pay pressures continue to ease.

Commenting on the latest survey results, Emma Gibson, Office Senior Partner in Reading at KPMG, said:

“The latest survey highlights that demand for permanent staff in the South is falling and weaker than in other regions in the UK, while part-time vacancies rose at the slowest rate in four months. This ongoing hesitancy among employers will partly be the result of the long-term economic uncertainty and budget constraints that are impacting businesses everywhere.

“It will be interesting to see whether these trends persist or if the recent slight calming of inflation rates positively impacts the outlook for both employers and jobseekers in the coming months.”

Softer, but still sharp decline in permanent placements

Recruitment consultancies based in the South of England registered a further substantial decline in permanent staff appointments during September. This was despite the rate of contraction easing to the softest in three months. Anecdotal evidence indicated that rising costs and uncertainty over the economic outlook were the main factors that dampened permanent staff hiring.

The South of England recorded the quickest drop in permanent placements of all four monitored English regions.

Temp billings fall at quicker pace

Temp billings received by recruiters in the South of England fell for the third straight month in September. Whilst modest, the rate of contraction was the most pronounced since July 2020. The latest reduction was driven by softer market conditions and pressure on clients’ budgets, according to panel members.

The South of England bucked the wider trend as billings increased across the three other monitored English regions, with London seeing the steepest rate of growth.

Job vacancies

Demand for permanent workers in the South of England weakened for the second month running in September. Though modest, the rate of decline was the fastest since October 2020 and quicker than the UK-wide trend.

September survey data signalled a further slowdown in temporary vacancy growth across the South of England. The latest uptick in demand for temp staff was the weakest in four months and slower than the national average.

Staff Availability

Permanent labour supply rises at softest pace for four months

As has been the case since March, the availability of permanent staff across the South of England improved during September. Though solid, the rate of expansion softened for the second month in a row and was the weakest since May.

The increase was also the slowest of all four monitored English regions. When explaining the latest rise in permanent staff supply, recruiters often mentioned this was due to company layoffs and reduced demand.

Sharper increase in the availability of temporary workers

The upturn in temporary candidate numbers across the South of England gathered pace during September. Notably, the rate of growth was the sharpest recorded since November 2020 and was the steepest of all four monitored English regions by a wide margin.

Recruiters in the region often commented that the availability of short-term staff had increased due to lower activity at clients and a lack of new projects.

Special Feature

This section features data from the Recruitment and Employment Confederation

Recruiter Confidence in AI: Bridging the Perception Gap

The proliferation of Artificial Intelligence (AI) use among the public has sparked a wider conversation about how recruiters can harness AI’s potential to advance both their businesses and the industry. AI in the recruitment industry could be adopted for crafting content like job postings and interview questions using Generative AI; using Natural Language Processing (NLP) for assessing candidates via video; descriptive AI could screen CVs and candidate profiles efficiently.

A common misconception surrounding AI’s role in recruitment is that these tools are either too novel or pose a threat to recruiters’ job security. But AI has already made significant inroads in recruitment, with automatic CV screening tools serving as a prime example. Emerging technologies like GenAI now act as assistants, enhancing the efficiency of hiring firms. The landscape of how recruiters employ AI has undergone substantial transformation in recent years, yielding numerous benefits. Notably, AI streamlines processes, enhances decision-making, and can mitigate human biases if used sensibly. REC and the Centre for Data Ethics and Innovation have done some work to offer guidance on the ethical use of AI.

Public attitudes towards AI are evolving, as reflected by the Turing Institute report, where nearly two-thirds of respondents expressed concerns about workplaces leaning excessively on AI for recruitment, which highlights a certain unease regarding AI’s role in hiring decisions. Nevertheless, the general public acknowledges the benefits of AI in recruitment, with 49% of respondents recognising its capacity to accelerate processes as a significant advantage. Additionally, AI is seen as a way to reduce human bias, addressing a persistent challenge in traditional recruitment methods. In fact, 41% of respondents believe AI is less likely than humans to discriminate against certain groups in society.

Despite these advantages, a recent survey conducted by the Recruitment and Employment Confederation (REC) suggests the HR industry has been relatively slow in embracing AI tools. REC’s JobsOutlook shows currently only 8% of recruiters use AI tools in the recruitment process and out of the remaining 92%, only 15% of recruiters intend to use AI tools in the near future. The impact is broadly similar across small, medium and large organisations, and the polling was taken from a sample representative of region, industry sector and public/ private split. As the recruitment field continues to evolve rapidly, it will be crucial for all firms within the industry to prioritise engagement with AI in order to remain competitive players.

The Centre for Data Ethics and Innovation’s (CDEI) latest research on members of the public found that the main concern among respondents (52%) is the perceived opacity of decision-making when AI algorithms are involved. When respondents were asked to rate their trust in the use of algorithmic data in recruitment on a scale from 1 to 10, the average score was a modest 3.9. This ‘Jobs market remains resilient as economic confidence rebounds underscores the pressing need to build public trust in AI systems used in recruitment.

To stay ahead of the curve, recruitment agencies must not only embrace AI more vigorously but actively work to foster trust and transparency in their use of AI-driven technologies.

At Jo Thompson Recruitment, we communicate seamlessly with hiring managers, fuel collaboration by sharing information and insights. Hiring managers are time-poor, so providing pre-qualified candidates with data driven insights and creating the resilient, agile and diverse workforce you need to succeed is a major win.

We can support you to refine your data-driven recruitment strategy and tailor your approach to each target audience. Help you make informed talent decisions around diversity and hidden talent pools. To discuss how Jo Thompson Recruitment can assist you with your resourcing needs, please email us at or give us a call at 01635 918955 for further details.