The latest KPMG and REC, UK Report on Jobs: London pointed to a positive hiring environment midway through the third quarter, as businesses continued to add permanent staff and reported higher temp billings.
That said, growth rates eased in both cases. The modest slowdown in hiring activity coincided with weaker increases in permanent and temporary vacancies across the capital.
Turning to pay, growth rates eased after the previous month’s peaks and were subdued by historical standards, though increases were still solid overall.
At the same time, the availability of both permanent and temporary workers rose at faster rates, with some recruiters indicating that redundancies had partly driven the latest increase.
The KPMG and REC, UK Report on Jobs: London is compiled by S&P Global from responses to questionnaires sent to around 100 recruitment and employment consultancies in London.
August marked a second straight monthly rise in permanent placements across the capital. While the pace of growth was solid and the fastest of the four tracked English regions, it lost some momentum from the recent high recorded in July.
According to anecdotal evidence, improved market conditions, a boost in demand in some sectors and improved customer confidence underpinned the latest uptick.
Growth in permanent placements was also recorded across the UK as a whole for the first time in 47 months, though the pace of increase was fractional overall.
Billings received from short-term workers rose in London for a fourth month running in August. Improved market conditions and stronger customer confidence were cited by panellists as factors underpinning the latest increase.
That said, the pace of growth eased to a three-month low, was modest and weaker than the UK-wide average.
A fifth successive monthly rise in permanent vacancies was recorded across London during August. While London was the only monitored English region to register a rise, the latest upturn was only modest and the weakest in the current sequence of expansion.
Similarly, demand for temp workers also improved across the capital, but only to a modest extent which was the weakest in the current four-month sequence of growth. The uptick in London contrasted with a decrease seen across the UK as a whole.
Recruiters based in London registered another rapid rise in the supply of permanent candidates during August, thereby stretching the current run of increases to 45 months. The increase was attributed to more candidates being open to moving to new roles, as well as redundancies.
Despite accelerating over the course of the month, the pace of growth was the second-weakest in two-and-a-half years and slower than that seen across the UK as a whole.
Similar to the trend seen for permanent staff supply, the availability of candidates for temporary roles also rose markedly and at a stronger pace during August. Redundancies, the end of the FIFA World Cup and worries about the economic environment were some of the reasons cited by panellists for the latest increase.
Moreover, of the four tracked English regions, London recorded the strongest increase in temp staff supply and was the only area where the pace of growth accelerated.
Following a spike in July, when the rate of permanent starting salary inflation hit a 16-month high, August marked a notably softer rise in pay across the capital. That said, the increase was still strong and broadly in line with that recorded across the UK as a whole.
Starting salaries across London have now risen on a monthly basis for five-and-a-half years straight.
The latest data signalled a solid rise in hourly wages for short-term workers across the capital, thereby extending the current run of increases to five months. That said, the respective seasonally adjusted index ticked down for the first time in five months to signal a moderate increase which was the weakest since May. The rise was also the softest of the four tracked English regions.
Anna Purchas, Vice Chair & London Office Senior Partner at KPMG UK, said: “London continues to lead the recovery in hiring, with permanent placements rising faster in the capital than anywhere else in England during August. It’s an encouraging sign that businesses are feeling more confident about bringing people into their organisations.
“Recovery is at an early stage. We saw hiring of both temporary and permanent staff grow in August and there are more people looking for work. That underlines the need to turn the encouraging signs we’re seeing into a broader and more sustained recovery across the capital.
“There are good reasons to be optimistic about what comes next given London attracted £10.7 billion of venture capital in the first half of the year, much of it driven by AI, creating real potential for the capital’s high-growth businesses to generate the next wave of jobs. The priority now is making sure that investment translates into sustainable growth and opportunities across London’s economy.”
Maxine Bligh, Interim Chief Executive at the Recruitment and Employment Confederation (REC), said: “The job market is starting to power up again in London after employers spent much of this year switching permanent hiring on and off. Improved market conditions and stronger customer confidence are underpinning a fourth successive month of growth in revenue from temp billings, too. We are also seeing a fifth consecutive monthly rise in permanent vacancies in London, while temp vacancies have now increased for four months in a row.
“Government, business and trade unions must act to shore up this fragile momentum in the job market. This is not the time to take the job market for granted. Instead, government should follow through on its commitment to lessen burdens on business. This means greater pragmatism on the employment rights agenda, including lessening the gamble the government is taking with its guaranteed hours policy. It also means delivering an Autumn Budget that demonstrates the government is serious about backing business and provides employers with the confidence they need to hire, invest and grow.”
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