The North of England survey from the UK Report on Jobs by KPMG and REC, showed diverging trends between staff types in December, as the fastest fall in permanent staff appointments since July 2020 compared with an uptick in temp billings. That said, the expansion in billings was only marginal overall.
Meanwhile, there was a slight improvement in vacancy growth in December, although the overall trend in staff demand was subdued relative to the 2022 average. Staff availability deteriorated further during the latest survey period, although candidate efforts to find better-paid roles supported improvements in some cases. Lastly, pay pressures remained elevated as demand and supply imbalances meant that the market remained candidate-driven.
The KPMG and REC, UK Report on Jobs: North of England is compiled by S&P Global from responses to questionnaires sent to around 150 recruitment and employment consultancies in the North of England.
Warren Middleton, Office Senior Partner at KPMG in Manchester, said:
“Job vacancy growth picked up pace in the North during December, remaining well above national level trends. A rise in vacancies shows ambition among businesses to increase capacity to take advantage of opportunities in a difficult economic environment. Yet it also reflects the growing scarcity of good talent, as many employees are willing to sit out uncertainty in their current posts. Firms will hope to take advantage of January’s nature of being a popular month for resignations, as they look to fill longstanding vacancies to underpin growth.”
Sharpest fall in staff appointments since July 2020
The placement of staff into permanent roles across the North of England fell in December, marking a third successive monthly decline. Moreover, the rate of contraction was strong overall and the sharpest since July 2020. Slowing client activity levels, low candidate numbers and hesitancy to change roles were factors cited by surveyed recruiters.
The decrease across the North of England was in line with that seen for the UK as a whole.
For the first time since September, the seasonally adjusted Temporary Billings Index posted above the 50.0 no-change mark, indicating an increase in billings received by North of England recruiters from the employment of short-term staff.
That said, the expansion was only marginal overall and weaker than seen across the UK on average.
All four monitored English regions registered growth in temporary billings in December with the strongest expansion recorded in the South of England.
Demand for staff continued to increase across the North of England during December, and at rates which continue to exceed those seen in the other three monitored parts of England.
In fact, both permanent and temporary job openings rose at their fastest rates for three months during the latest survey period. Nevertheless, expansions remained well down from those seen in the first half of 2022.
Softest fall in permanent staff availability since March 2021
The seasonally adjusted Permanent Staff Availability Index rose markedly in December, but remained below the 50.0 no-change mark, to signal a considerably weaker deterioration in permanent candidate numbers across the North of England. Overall, the decline was the weakest since March 2021. Hesitancy among staff to move jobs was mentioned, although some people were reportedly open to new roles in a bid to secure higher pay.
Three of the four monitored English regions registered lower permanent staff availability in December. London bucked the wider trend and recorded the first uplift in 20 months.
Having broadly stabilised during the previous survey period, December data showed a renewed dip in temporary staff availability across the North of England. A lack of quality candidates on the market, and a preference among workers for permanent roles, were factors cited by recruitment agencies.
Although the deterioration was only moderate, it was faster than those recorded in the other three monitored English regions.
Starting salary pressures remain elevated in December
The latest survey data signalled a further sharp increase in starting salaries across the North of England in December. The rate of inflation also edged up slightly and was above its historical average. Strong competition for staff, and efforts to secure high-calibre workers, drove the upturn in salaries, according to surveyed recruiters.
All four monitored English regions recorded increases, with Midlands-based recruiters seeing the fastest inflation and London the slowest.
Surveyed recruiters in the North of England signalled rising temporary wages at the end of 2022. Moreover, the increase was sharp overall and faster than those seen across the other three monitored English regions.
That said, the rate of increase was the slowest since April 2021. Although clients reportedly upped their offers to secure talent, some contractors were willing to accept lower rates.
Neil Carberry, Chief Executive of the REC, said:
“A slowdown in permanent placements is not unusual in December. Recruiters tell us that this was because firms pushed hiring activity back into January in the face of high inflation and economic uncertainty. The big test of the labour market will come this month.
“Demand for staff continued to increase across the North of England at rates which exceeded those seen in the rest of England. Both permanent and temporary job openings rose at their fastest rates for three months, with temp billings rising for first time in three months in December. We also saw increases in starting salaries for permanent and temporary staff across the North of England.
“As we move into 2023, the need to ensure our labour market can deliver economic growth and prosperity should be a critical concern to politicians. People telling recruiters that they are anxious about moving jobs is a concern in this regard – as a move is a great way to boost pay and build up skills. If people are less willing to move jobs, this could make shortages worse in the near term. That is why a stable economy, and support to address labour and skills shortages – from welfare to work support to immigration and skills reform, need to be major priorities for all the UK governments.”
