Home Business News KPMG: Hiring activity weakens only slightly in September

KPMG: Hiring activity weakens only slightly in September

by LLB staff reporter
11th Oct 20 2:39 pm

The KPMG and REC, UK Report on Jobs indicated only a slight fall in permanent placements across London in September, marking the weakest decline since hiring began to fall at the start of the year. The improvement came as businesses continued to recover from the coronavirus disease (COVID-19) downturn, although there were still signs of weak demand for staff and a sharp rise in worker availability.

At the same time, a greater focus on temp roles led to an upturn in short-term vacancies, the first since February. Temp billings fell only slightly, while wages for temporary workers declined at the weakest rate in six months.

That said, the capital continued to lag the rest of the UK in terms of permanent placements and temporary billings, with both series recording sharp growth at the national level.

The London report is compiled by IHS Markit from responses to questionnaires sent to around 100 recruitment and employment consultancies in the capital.

Permanent staff appointments fall only slightly

London recruitment consultancies saw a slower fall in permanent staff placements for the fifth consecutive month in September. Moreover, the decrease was the weakest since the current period of decline began in January and only marginal. Where a fall was noted, panellists linked this to challenging market conditions due to the COVID-19 pandemic. However, some recruiters saw an uplift in hires as some companies resumed operations.

Meanwhile, the UK as a whole saw a second monthly increase in permanent placements, and one that was sharp overall. The Midlands recorded the fastest increase in staff appointments, followed by the South of England and the North of England respectively.

Adjusted for seasonal factors, the Temporary Billings Index posted just below the 50.0 neutral mark in September, to signal a slight fall in billings from the placement of temp workers in London. The rate of decline was the softest seen in the current nine-month sequence of contraction, as more recruiters saw a recovery in temp roles. That said, this compared with a further sharp rise in temporary billings at the national level, as the three remaining English regions all saw strong upturns.

The number of permanent vacancies across the capital continued to fall in September, although the rate of decline slowed since August. Meanwhile, there was a slight rise in open roles at the national level. Notably, temporary vacancies in London began to increase during September, marking the first expansion in short-term positions since February. The upturn was marginal, however, and slower than the UK average.

Permanent staff supply continues to rise sharply in September

Latest survey data signalled a further rise in the availability of permanent workers across London in September. The increase in people looking for permanent jobs was the least marked since May, but remained historically strong overall and was broadly in line with the average seen across the UK. Recruiters highlighted greater amounts of redundancies as a key reason for higher candidate supply.

Elsewhere, the Midlands recorded the sharpest increase in permanent staff supply during September, overtaking the rate of growth seen in London. The North of England saw the slowest, but still marked, expansion.

London-based recruitment consultancies continued to see a sharp rise in candidate numbers for temp jobs at the end of the third quarter. However, the rate of growth slowed further from July’s record, and was the softest seen for three months. Where higher availability was noted, panellists cited redundancies and the winding down of the government’s current furlough scheme.

Continuing the recent trend, the rise in temp staff supply in the capital was stronger than the UK average, and the quickest of the four monitored English areas.

Starting salaries fall for sixth month running

Recruiters in London registered a further drop in salaries paid to newly-placed permanent staff in September, extending the run of decline that began in April. The rate of reduction was sharp, albeit the softest seen in this sequence. Panellists mainly attributed the fall in salaries to a rise in candidate supply.

Moreover, the rate of salary deflation exceeded that seen across the UK as a whole for the sixth month running. Declines were widespread across the four English regions, with rates of decrease accelerating in the Midlands, the South of England and the North of England.

Wages for temporary workers in London fell at a softer pace in September, as the respective seasonally adjusted index rose for the fourth month in a row. Nevertheless, the rate of decline remained solid, and was linked to budget cuts and a rise in temp candidate numbers. London also saw a much sharper fall in wages compared to the national average. An uptick in wages in the North of England helped to stem the overall decline across the UK as a whole.

James Stewart, Vice Chair at KPMG said, “While it’s encouraging to see hiring activity in London move closer to stabilisation at the end of the third quarter, it’s concerning to see another rapid rise in total candidate availability.

“With increasing unease over what will happen in the coming months with the pandemic, Brexit and with the end of the furlough scheme in sight, the uncertainty for UK business is not going to dissipate anytime soon.

“The Government has got challenging times ahead to continue to offer adequate support to business, opportunities for jobs seekers to upskill while helping instill confidence in the UK workforce.”

Neil Carberry, Chief Executive of the Recruitment & Employment Confederation added, “Placements and demand for permanent staff continue to fall in London, although at a slower pace than previously. This makes London an outlier by comparison to other parts of the country – reflecting the unique challenges of re-opening the city’s economy. A plan for safely returning to workplaces in the capital – rather than advising people to stay at home – will be important to London catching up with the rest of the UK. Recruiters around the country have been reporting a positive trend to the REC, and this survey has returned to positive territory elsewhere.

“Across the UK, the story varies between sectors, but it’s important to emphasise the fact that the labour market is always creating roles – our challenge is to help people to find them. That’s where the UK’s world-leading recruitment sector comes in. Recruiters are experts on where opportunities lie, and at supporting people to get those new jobs. We have a huge part to play in getting the economy moving again and Government schemes need to leverage the skills we have to offer.”

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