Hiring Activity Continues To Fall Across The North Of England KPMG And REC

The latest KPMG and REC, UK Report on Jobs: North of England survey saw recruitment activity drop again in April, though to a lesser extent compared to March. Meanwhile, in order to attract skilled workers, pay growth accelerated and was marked for both permanent and temporary staff.

With staff placements continuing to fall, availability picked up again in April. Though still sharp, both types of staff supply increased at softer rates compared to March. At the same time, vacancy growth was only marginal and notably subdued compared to the long-run average.

The KPMG and REC, UK Report on Jobs: North of England is compiled by S&P Global from responses to questionnaires sent to around 150 recruitment and employment consultancies in the North of England.

Permanent staff appointments fall at weaker pace in April

April survey data showed a solid fall in the number of placements of permanent staff made across the North of England. The latest drop marked the tenth successive monthly decline, though the rate slowed to the softest for five months. According to panel members, firms were reluctant to hire new permanent staff, with some mentioning tight budgets, in particular. Of the four monitored English regions, only the South of England reported a faster contraction in permanent staff appointments than that seen locally.

The North of England reported a drop in the number of temporary billings for the third month running in April. Recruiters in the region often blamed the decline on firms' budgetary restrictions. That said, the rate of contraction was only marginal and the softest in the current sequence. The North of England recorded a softer decline in the number of temp billings than that seen at the UK level in April.

Permanent job vacancies rose for the second straight month across the North of England in April. The rate of increase was only marginal, however, and largely in line with that of March. Of the four monitored regions of England, only the Midlands reported a faster rise in April.

Following two consecutive months of decline, the North of England reported a renewed rise in temp job opening in April. The uplift was modest and slower only than the Midlands.

Further steep rise in permanent staff supply in April

April survey data saw the availability of candidates to fill permanent roles increase again across the North of England, as has been the case since the turn of the year. In anecdotal evidence, recruiters blamed poor market conditions, including redundancies. Though rapid, the rate of expansion eased on the month. The pace at which permanent staff supply picked up across the region was largely consistent with the overall UK trend.

Recruiters across the North of England pointed to a further rise in temp staff supply in April, thereby stretching the current period of expansion to 14 months. Panellists linked the rise to a lack of demand for staff, as well as increased interest from candidates for temporary work to combat the cost-of-living crisis. The speed at which temp availability rose was marked, but slower than in March. The local increase in temp staff supply was slower than that seen across the UK on average.

Permanent salary inflation at six-month high

Salaries awarded to new permanent joiners across the North of England rose again in April, thereby continuing the trend of pay growth which began in March 2021. The rate of inflation was sharp, as well as the strongest for six months. Recruiters often attributed the rise to increased competition for skilled workers. Compared to the four monitored English regions, only the Midlands outpaced the North in terms of starting salary growth in April.

Latest survey data signalled a further increase in wages for temporary workers across the North of England, thereby marking the fifth successive monthly increase. In fact, inflation in hourly rate of pay was sharp and the strongest recorded in nearly a year.

For the third month running, the increase across the North of England was the most pronounced of all four monitored English regions.

Candidates are looking for even higher salaries and wages so they can more confidently move roles amid ongoing uncertainty and an increased cost of living. When combined with increased competition for skilled workers, businesses are finding they have to offer higher salaries if they want to secure the talent.

However, a challenging economic environment is continuing to have an impact on recruitment in the North of England as businesses tighten their purse strings. For businesses to regain the confidence to increase hiring activity, they will be looking for improved economic conditions and certainty especially given the salaries being offered in the market continue to rise.

Neil Carberry

REC Chief Executive Neil Carberry, said:

“The critical moment in any labour market slowdown is the point at which demand starts to turn around. Today’s hiring data suggests that point is close in the UK, with fewer recruitment firms reporting a drop in demand. While the trend is still gently down, the pace of decline in permanent hiring slowed to the softest for five months in the North. Temporary hiring, which has had much less of a decline overall, showed only a marginal contraction in the North. Firms have told us all year that they will be willing to hire and invest in their business when confidence returns to the wider economy – and there is a glimmer of lower inflation and the prospect of lower interest rates starting to drive that now.

“Pay continues to rise, with a bump up this month likely to have been driven by the April peak in employer pay rises and the recent Minimum Wage rise. With substantial wage rises attracting people to work, and low unemployment, businesses and government alike will need new approaches to developing and engaging our labour force – alongside new technology – if the UK is going to grow in the way it needs to.

“Our flexible labour market is at the heart of this. It is one of the big success stories of the UK economy, with millions of workers and companies building their futures in ways that would not be possible in the one-size-fits-all approach of the past. It’s why, for instance, nurses choose to work via agencies so they can get control over their working lives. Any government needs to work hard to understand what workers and companies need now – a more nuanced debate than is often centre stage in Whitehall and Westminster. A partnership approach with businesses is essential.”