Report on Jobs: Hiring slows again in November, driving quickest rise in candidate supply for almost three years

• Permanent staff placements and temp billings decline
• Supply of candidates expands at fastest rate since end of 2020
• Starting salary inflation dips to 32-month low

Summary

A weak economic outlook and greater caution among employers dampened recruitment during November, according to the latest KPMG and REC, UK Report on Jobs survey, compiled by S&P Global. A sharper fall in permanent staff appointments combined with a fresh decline in temp billings, to signal a broad-based reduction in hiring activity. Concurrently, vacancies fell slightly for the second time in the past three months.  

The overall availability of candidates meanwhile rose at a rapid pace that was the quickest since December 2020, with recruiters widely linking this to redundancies and workers concerned over current job security. At the same time, pay pressures receded again in November. Notably, rates of starting salary and temp pay inflation slipped to 32- and 33-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.

Weak economic climate curbs hiring activity in November

Lingering economic uncertainty and hesitancy to commit to new hires continued to weigh on recruitment activity across the UK during November. Permanent staff appointments contracted at the second-quickest rate since June 2020, while temp billings fell back into decline after two months of expansion. However, the latter fell at a much softer pace than that seen for permanent staff appointments, as some employers sought the flexibility of contract workers in the current economic environment.

 

Overall candidate numbers rise at accelerated pace

The slowdown in hiring and reports of redundancies pushed up the availability of workers for the ninth straight month in November. While the upturn in permanent staff supply continued to exceed that seen for temp candidates, both rose at rapid rates that were the sharpest since December 2020.

Slower increases in starting salaries and temp pay

Recruitment consultancies signalled a further easing in the rate of starting salary inflation in the latest survey. Though sharp, the increase in permanent starters' pay was the least pronounced since March 2021 and below the series long-run trend. At the same time, temp wages rose at the slowest rate in 33 months. While competition for suitably-skilled workers continued to push up pay overall, budgetary pressures at clients had reportedly weighed on overall growth.

Vacancies decline slightly for second time in three months

Overall demand for staff weakened slightly in November, after stabilising in October. This marked only the second time that total vacancies had fallen since February 2021. Underlying data highlighted that permanent staff vacancies fell slightly for the third month running, while growth of demand for temp workers remained much softer than the historical trend and only modest.

Regional and Sector Variations

London recorded by far the steepest reduction in permanent placements of all four monitored English regions. The Midlands was the only area to see an increase, albeit one that was mild overall. 

Divergent trends were seen at the regional level, with temp billings falling in the South of England and London but rising slightly in the Midlands and the North of England.

Latest data signalled that permanent vacancies fell in both the private and public sectors, with the latter noting the quicker rate of decline. The overall upturn in demand for temporary staff was meanwhile supported by the private sector, as short-term vacancies continued to fall in the public sector.

Sector data revealed that demand for permanent staff fell in half of the ten monitored categories. Construction saw the steepest rate of decline, followed by Executive/Professional. The Nursing/Medical/Care and Engineering sectors meanwhile saw the strongest upturns in demand.

Short-term vacancies rose in just over half of the ten monitored employment categories during November. Hotel & Catering saw the quickest rise in demand for temporary staff. Of the four sectors that saw demand weaken, the steepest drop in vacancies was signalled for Retail staff.

Comments

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

“The UK labour market remains tight as we move towards the end of a difficult year for the UK economy. The balance of supply vs demand is out of sync: we’re seeing even more people looking for work, with candidate supply rising at the fastest pace since the initial pandemic wave three years ago, but the number of available roles falling again in November. Employers are reining in hiring and continuing with redundancies in response to the sustained economic slowdown.

“Businesses want to plan for the year ahead, but the prospect of faltering UK economic growth means the certainty they need isn’t there. This is now impacting starting salaries, as pay inflation isn’t as sharp as in previous months.

“Even temp staff billings - which have given much needed flexibility to employers in key sectors such as health & care and IT - are facing some contraction. And with the Bank of England looking like it will be keeping interest rates high for now, businesses will need to stay resilient to manage this period of flux.”

Neil Carberry, REC Chief Executive, said:

“2023 has been a testing year in our labour market, with permanent hiring dropping and temporary hiring flat or growing only a little. That’s the story again in this month’s data, though the market is quieter overall as firms start to move activity into 2024 rather than pressing ahead now.  The averages hide a great deal of variability in regions and sectors though. The Midlands and the North both saw strong performances for temporary and permanent roles, in sharp contrast with London and the South, with permanent hiring in London especially slow. The ongoing stronger performance of the private sector on new vacancies is also a notable positive signal.

“Anecdote from REC members supports our client survey finding that employers are considering coming back to the market, but that in many cases the activity will be next year. So, while these figures represent a further slowdown in current hiring conditions, recruiters are more positive about the new year.

“For policy makers, any return to growth will put strain on a labour market with embedded shortages – this week’s pro-election rather than pro-economy decision on immigration will exacerbate that. Any return to growth could drive domestically-generated inflation unless we adopt a proper plan for workforce capacity, embracing better welfare-to-work support, finally reforming the Apprenticeship Levy, funding Further Education properly and the kind of support for school leavers suggested by today’s Broken Ladders report from EDSK and REED on the school-to-work transition.”

 

Methodology

The KPMG and REC, UK Report on Jobs is compiled by S&P Global from responses to questionnaires sent to a panel of around 400 UK recruitment and employment consultancies. 

Survey responses are collected in the second half of each month and indicate the direction of change compared to the previous month. A diffusion index is calculated for each survey variable. The index is the sum of the percentage of ‘higher’ responses and half the percentage of ‘unchanged’ responses. The indices vary between 0 and 100, with a reading above 50 indicating an overall increase compared to the previous month, and below 50 an overall decrease. The indices are then seasonally adjusted.

Underlying survey data are not revised after publication, but seasonal adjustment factors may be revised from time to time as appropriate which will affect the seasonally adjusted data series.

For further information on the survey methodology, please contact economics@spglobal.com.

Full reports and historical data from the KPMG and REC, UK Report on Jobs are available by subscription. Please contact economics@spglobal.com.

About KPMG

KPMG LLP, a UK limited liability partnership, operates from 20 offices across the UK with approximately 17,000 partners and staff. The UK firm recorded a revenue of £2.72 billion in the year ended 30 September 2022.  

KPMG is a global organization of independent professional services firms providing Audit, Legal, Tax and Advisory services. It operates in 143 countries and territories with more than 265,000 partners and employees working in member firms around the world. Each KPMG firm is a legally distinct and separate entity and describes itself as such. KPMG International Limited is a private English company limited by guarantee. KPMG International Limited and its related entities do not provide services to clients.

About REC

The REC is the voice of the recruitment industry, speaking up for great recruiters. We drive standards and empower recruitment businesses to build better futures for their candidates and themselves. We are champions of an industry which is fundamental to the strength of the UK economy. Find out more about the Recruitment & Employment Confederation at www.rec.uk.com.

About S&P Global

S&P Global (NYSE: SPGI) S&P Global provides essential intelligence. We enable governments, businesses and individuals with the right data, expertise and connected technology so that they can make decisions with conviction. From helping our customers assess new investments to guiding them through ESG and energy transition across supply chains, we unlock new opportunities, solve challenges and accelerate progress for the world.

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