UK Jobs Report: Economic Uncertainty, Rising Costs Affected Hiring Decisions in Sept 2023

Uncertainty over the economic outlook and rising costs continued to weigh on hiring decisions in September, according to the KPMG and REC, UK Report on Jobs survey, compiled by S&P Global.

Permanent placements fell again as companies “were often reluctant to commit to permanent hires, but the rate of decline was the weakest in three months.” Improved demand for short-term staff meanwhile “helped to drive a modest uptick in temp billings that was the most pronounced since April.”

Turning to candidate supply, “the availability of workers improved at a softer, but still sharp rate, with recruiters often linking this to redundancies.” Concurrently, pay pressures continued to weaken, “with rates of starting salary inflation and temp wage growth edging down to 30- and 31-month lows respectively.”

The report is compiled by S&P Global from responses “to questionnaires sent to a panel of around 400 UK recruitment and employment consultancies.”

Downturn in permanent staff hiring eases, temp billings rise

Recruitment consultancies across the UK “signaled a softer, but still solid decline in permanent staff appointments during September.” According to panelists, 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.”

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.”

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.”

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.”

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