Jo Thompson Recruitment contributes to the Report on Jobs, a comprehensive guide on the UK labour market drafted by KPMG and the Recruitment & Employment Confederation (REC), compiled by IHS Markit. This monthly report is built upon survey data from recruitment consultancies and employers, providing valuable insights into the latest labour market trends.
Latest UK Report on Jobs Highlights
The latest UK Report on Jobs by the REC, KPMG, and IHS Markit highlights a continued slowdown in recruitment activity, with permanent placements and temporary billings declining at softer rates amid economic uncertainty and rising costs. While candidate availability increased sharply, demand for staff and vacancies fell further, reflecting ongoing challenges in the UK labour market.
Commenting on the latest survey results, Jon Holt, Group Chief Executive and UK Senior Partner KPMG, said:
“A softening in the pace of the hiring slowdown failed to bring any significant green shoots for the jobs market in April, as recruitment continued to be muted and the number of people looking for jobs increased. This is unsurprising, with businesses facing several pressures due to current global economic uncertainty and rising costs, it is unlikely to lead to a sudden turnaround in the market in the near term.
“Starting salaries increased again in April, as a new national minimum wage took effect, but the fact that the pace of growth continues to remain below the long-run average will support the Bank’s decision to decrease interest rates this month. While the inflation outlook has shown some improvement, businesses will be looking for more signs of market stability before committing to any major spending.”
Commenting, 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. While we are yet to see real momentum build, hopes of an improving picture in the second half of the year should be buoyed by today’s data.
“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.”
Executive Summary
The main findings for April are:
April sees softer fall in recruitment activity
Latest survey data collected from UK recruitment consultancies indicated a further reduction in permanent staff appointments during April amid reports of weak employer confidence and tighter hiring budgets. That said, the latest reduction was the softest seen since last September. A similar trend was observed for temp billings, which fell at the slowest pace in four months, albeit one that was solid overall.
Candidate supply continues to rise rapidly
Recruitment consultancies signalled a further substantial increase in the number of candidates seeking work in April. Moreover, the rate of growth eased only slightly from March and was therefore the second-sharpest since December 2020. The supply of permanent candidates expanded at a sharper rate than that seen for temporary staff. According to panellists, the uplifts in staff supply were largely due to job losses amid company restructuring efforts and redundancies, as well as a reduction in recruitment activity.
Temp wage growth improves
Starting salary inflation was solid in April, with the rate of pay growth unchanged from March’s seven-month high. However, the increase remained much slower than seen on average through the survey history (which began in October 1997). At the same time, temp wage growth improved to the fastest in 11 months with panellists highlighting the inflationary impact of recent increases in the national minimum and living wage rates.
Demand for staff continues to decline sharply
Overall demand for staff weakened in April, as has been the case in each of the past 18 months. The rate of contraction quickened slightly since March, but remained softer than seen earlier in the year. Underlying data pointed to similarly sharp falls in both permanent and temporary vacancies.
Pay Pressures
Growth of permanent starters’ pay remains below long-run trend
Salaries awarded to newly-placed permanent workers increased for the fiftieth month in a row in April. Although the rate of inflation was unchanged from March’s seven-month high and solid, it remained notably weaker than the long-run series average. Efforts to attract and secure high quality candidates was a key factor pushing up salaries, according to panellists. Some employers raised pay in response to an increase in the national minimum and living wage rates. Starting salaries rose across all four monitored English regions, led by the Midlands.
Temp pay inflation quickens to 11-month high
Average hourly rates of pay for temporary staff across the UK continued to increase at the start of the second quarter. Furthermore, the rate of wage inflation was the quickest recorded in nearly a year and solid. Where higher temp pay was recorded, it was generally linked to stronger than average increases in the national minimum and living wage rates in April.
The South of England recorded the strongest uplift in wages during April, though solid increases were also seen elsewhere.
South of England
Recruitment activity falls at a sharper rate
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.”
Staff Availability
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.
Availability of temporary workers increases at sharper pace
Fewer job opportunities and company lay offs 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.
Pay Pressures
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.
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).
Temp wage growth rebounds in April
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.
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