Vacancies fall more quickly in October, report on Midlands suggests

That's according to the latest KPMG and REC, UK Report on Jobs survey, compiled by S&P Global. 

Temporary billings continued to rise, however, in contrast to a further reduction in permanent placements. 

On the pay front, permanent salary inflation softened while there was a renewed increase in wages for temporary staff.

The report is compiled from responses to questionnaires sent to around 100 recruitment and employment consultancies in the Midlands.

October data pointed to a sharp and accelerated reduction in permanent placements in the Midlands, thereby extending the current sequence of decline to five months. 

Moreover, the rate of contraction was the fastest since January. According to respondents, market uncertainty meant that companies were often reluctant to hire at present.

 The reduction in permanent placements in the Midlands was sharper than the UK average. The steepest reduction overall was in the South of England, with the slowest decline in London.

 In marked contrast to the picture for permanent placements, temporary billings continued to rise in the Midlands during October. Moreover, the rate of expansion was solid and faster than in September. 

Temporary billings have now increased in each of the past seven months.

 The North of England was the only other region to see temporary billings rise, with the Midlands posting the sharpest expansion overall.

 Demand for both permanent and temporary workers declined during October, and to larger extents than was the case in September.

 Permanent vacancies fell particularly sharply, with the rate of contraction the most marked since January 2021. Only the South of England posted a steeper fall than the Midlands.

 Demand for temps was down for the second month running, and at the fastest pace since the opening wave of the COVID-19 pandemic in mid-2020.

Redundancies meant that permanent staff availability increased sharply again in October. The number of candidates rose for the nineteenth month running, albeit at a slightly softer pace than in September.

Higher candidate numbers were seen across each of the monitored regions, led by London. The slowest increase in permanent staff availability was recorded in the Midlands.

The rate of increase in temporary candidate numbers quickened markedly during October and was the strongest since November last year. The rise in the Midlands was the second-largest of the monitored English regions, just behind the capital.

As was the case with permanent staff, the rise in availability of candidates for temporary positions was mainly due to redundancies.

As has been the case on a monthly basis since March 2021, starting salaries for permanent workers in the Midlands rose in October. Panellists reported that the increase often reflected the placement of candidates into senior roles.

The rate of inflation was marked and by far the sharpest of the four monitored English regions, despite easing from the previous survey period. Modest increases were seen elsewhere.

After having dropped for the first time in almost four years in September, hourly pay rates for temporary staff increased in October. Moreover, the solid rise was the fastest since June.

As was the case with permanent starting salaries, the increase in temporary pay rates in the Midlands was the sharpest of the English regions covered. The softest rise was in the South.

Kate Holt, People Consulting Partner at KPMG in the Midlands said: “October’s figures recognise the challenges facing the Midlands’ labour market, as demand for both permanent and temporary staff continues to fall.

“That said, it’s likely that many firms in the region will have eased off on recruitment until the outcomes of the Autumn Budget were known.

 “The increase in National Insurance announced by the Chancellor provides a further cost consideration for management teams but we would hope to see more firms in the Midlands looking to enact their recruitment plans for 2025 with the table now set.”

 Neil Carberry, REC Chief Executive, said:  “These figures are a timely reminder that demand from employers for new staff has weakened since the election – though the overall picture in the UK remains resilient by comparison to pre-pandemic.

"There is a positive sign in this month’s data with temp billings going up faster than September and now having increased in each of the past seven months in the Midlands. But things now stand in the balance – firms need to be persuaded to invest, with recent changes to NI thresholds, the minimum wage and prospective changes to employment law all causing concern. 

"Firms will be looking for the Government to deliver a clear, stable growth plan and detailed regulatory changes that enable firms rather than put them off over the next few months. Temporary work in particular is a fantastic way of helping people take steps out of inactivity, and the threat of new employment laws undermining opportunities for workers must be addressed.

 “There is little in the pay data, with salary rises in the Midlands easing from the month before, that suggests the Bank of England should step away from further cuts to interest rates, which will also boost business confidence. And data on shortage sectors is a timely reminder that delivering on a skill strategy that is aligned to business needs is one of the biggest things Government and businesses could achieve working together.”