HIRING ACTIVITY REMAINS MUTED IN MAY

blog header image

Posted : 12 Jun 2019 at 07:43:57
Category: Payroll News

Share this article

Key findings

  • Modest decline in permanent staff placements
  • Temp billings growth at 73-month low 
  • Demand for staff rises at historically subdued pace

Summary

The latest KPMG and REC, UK Report on Jobs, signalled that hiring trends remained subdued across the UK amid ongoing Brexit-related uncertainty. Permanent staff appointments fell at a slightly quicker pace than in April, while temp billings expanded at the slowest rate for over six years. At the same time, subdued confidence impacted on both the demand and supply of labour, with vacancy growth staying close to a multi-year low and staff availability declining further.

The report, which is compiled by IHS Markit from responses to questionnaires sent to a panel of around 400 UK recruitment and employment consultancies, indicated that permanent placements declined for the fourth time in the past five months during May. At the same time, billings received from the employment of short-term workers rose only marginally. 

Permanent placements fall again in May

The number of people placed into permanent job roles fell for the fourth time in the past five months in May, and at a quicker pace than in April. At the same time, temp billings expanded only marginally, with growth hitting a 73-month low. There were many reports that hiring activity was dampened by uncertainty, but also mentions that demand for staff had weakened compared to earlier in the year.

Vacancy growth holds close to multi-year low

Recruitment agencies signalled a slightly stronger rise in overall vacancies during May, but growth remained close to April's 80-month low. Although both permanent and temporary job openings rose solidly, rates of increase remained notably weaker than their historical averages.

Uncertainty weighs on candidate supply

Ongoing Brexit-related uncertainty and generally tight labour market conditions were cited as key factors weighing on candidate availability during May. Furthermore, both permanent and temporary staff supply declined at faster rates than in April. 

Starting salary inflation softens to 25-month low

Although salaries awarded to permanent starters continued to grow sharply in May, the rate of inflation was the least marked for just over two years. In contrast, temp wages increased at the quickest pace for six months. Panellists commonly stated that competition for scarce workers continued to place upward pressure on pay.

Regional and Sector Variations

Three of the four monitored English regions registered lower permanent staff appointments, with the Midlands seeing the quickest rate of decline. The North bucked the overall trend and saw a marked increase in permanent placements. Temp billings expanded in the South of England and in London during May. However, a further decline was seen in the Midlands while the North of England registered the first reduction since January. 

Vacancy growth continued to be largely driven by the private sector, according to the latest data. Sharp increases in demand were seen for both permanent and temporary workers in the private sector during May. In the public sector, temp vacancies rose at a steeper pace, but demand for permanent staff fell for the third month in a row. 

Demand for permanent staff remained strongest in IT & Computing in May, closely followed by Engineering. The only two monitored sectors to register lower permanent job vacancies were Construction and Retail. 

Nursing/Medical/Care saw the sharpest increase in temporary staff demand during May. A marked expansion in vacancies was also seen for Hotels & Catering. In contrast, demand for temp workers fell in Construction, Retail and Executive/Professional.

Comments

Commenting on the latest survey results, Neil Carberry, Recruitment & Employment Confederation chief executive, said: 

“The jobs market is still creating opportunities for those looking for work. With vacancies rising and starting salaries going up sharply, it is worth people talking to recruiters about that next step in their career. Sectors like IT, engineering and healthcare are hiring strongly, while the North of England showed the best performance in terms of regions.

“Overall, though, the survey again shows what uncertainty does to hiring plans. Total permanent placements fell again this month while temporary billings grew only marginally. Recruiters are reporting that demand for staff is slowing and their clients are reducing business activity on average. Worryingly, these trends are most pronounced in key sectors like retail and construction.”

James Stewart, Vice Chair at KPMG, said: 

“Brexit uncertainty continues to dampen the jobs market as companies kept their recruitment decisions on hold in May. Permanent staff appointments fell at a slightly faster pace than in April, while subdued confidence ensured that growth in temporary billings hit a six-year low.

“Of increasing concern is that uncertainty is feeding through to weaker growth in job vacancies, while the supply of candidates fell sharply as people are becoming more risk averse with regards to switching roles. Relatively muted trends for permanent staff vacancies were seen across the board, with retail, construction and executive/professional hit particularly badly. 

“We expect the labour market to remain in stalemate over the summer as the contest for a new Prime Minister kicks off. Companies are unlikely to make any dramatic investment decisions until a new leader is in place and have more insight on the future direction of Brexit.”



LATEST SIMILAR NEWS

HMRC OFF-PAYROLL WORKING RULES CONSULTATION CLOSES TODAY AT 11:45PM
Posted on: 28 May 2019 at 12:49:00
The HMRC Off-Payroll Working Rules Consultation closes today at 11:45pm.If you have any feedback, good or bad please email in your comments to;offpayrollworking.intheprivatesectorconsultation@hmrc.gsi.gov.ukor write in to;Employment Status and Intermediaries Policy Room 3C/15, 100 Parliament St...
HMRC CENSURED FOR ‘AGGRESSIVE’ PURSUIT OVER TAX AVOIDANCE
Posted on: 04 Dec 2018 at 09:53:47
HM Revenue & Customs’ “aggressive” approach to curbing tax avoidance is disproportionate and undermines the rule of law, a Lords committee said in a damning report on Tuesday. The upper house’s economic affairs committee — which includes two former chancellors, Alistair Darling and Norman Lamont...
PREMIER LEAGUE FOOTBALLERS LEFT 'SUICIDAL' OVER BAD FINANCIAL ADVICE... AND ACCUSE PFA OF A LACK OF SUPPORT
Posted on: 04 Dec 2018 at 09:12:44
The stress has put a massive strain on many stars’ relationships and their mental health, with a number suffering depression and accusing the players’ union, the PFA, of lack of support, Sportsmail can reveal.Stuart Cotton, a former HMRC tax inspector and founder of the IRO, has looked aft...
BUDGET RESPONSE: RECRUITMENT LEADERS REACT TO IR35 PLANS
Posted on: 05 Nov 2018 at 13:16:00
“Today’s announcement applying IR35 to the Private Sector from 2020 has really only raised more questions. Whilst it’s good that the Government has listened to the Consultation responses and has given businesses time to prepare for this change, the fact the law will only be applicable to large and m...
IR35 PRIVATE SECTOR ROLLOUT DELAYED BY CHANCELLOR
Posted on: 02 Nov 2018 at 12:13:16
It was not a decision that many found surprising, but the majority welcomed the chancellor’s decision to delay this measure until April 2020.There has been something of a widespread relief following on from Philip Hammond’s decision delay the introduction of IR35 status in the private sector until A...
CEST ASSESSMENT REJECTED BY JUDGE AS CONTRACTOR RECOUPS UNLAWFULLY DEDUCTED TAX
Posted on: 17 Oct 2018 at 21:37:35
A contractor has successfully used an employment tribunal to prove their outside IR35 status and reclaim thousands in overpaid tax, in a case during which the tribunal Judge ruled Elbourn was self-employed. This decision contradicted the result previously given using HMRC’s Check Employment Status f...