Good news for UK jobs

Permanent hiring in the UK stopped falling in July for the first time in 45 months, ending the longest downturn the KPMG and REC, UK Report on Jobs has recorded.

The survey, compiled by S&P Global from responses from around 400 recruitment and employment consultancies, found that permanent staff appointments held steady last month after a marginal decline in June.

Recruiters said demand for permanent staff remained subdued because of political and economic uncertainty and higher labour costs, though some employers pressed on with hiring tied to new projects.

Others turned to flexible staffing instead, pushing temp billings up for a fourth consecutive month at one of the strongest rates in three years.

Vacancies have shown similar signs of improvement. Demand for temporary workers rose for the first time in two years, and although the increase was modest, it was the quickest since August 2023.

Permanent vacancies kept falling, but at a slower pace, leaving overall demand for workers down by the smallest margin in 22 months.

Pay is also seeing an increase too. Starting salaries rose at the fastest rate in six months and temp wage growth reached a 26-month high, with recruiters repeatedly pointing to a shortage of candidates with the right skills or experience.

Even so, salary growth stayed well below its long-run trend, held back by the sheer number of people looking for work.

That is the catch for anyone job hunting. Candidate availability has now increased for nearly three and a half years, and while July’s rise was the softest since February, it remained sharp.

Recruiters linked the extra supply to redundancies and a lack of opportunities, which means competition for each opening is still intense even as the number of openings improves.

Where the jobs are

Demand for permanent workers rose across three of the ten sectors the survey monitors, with Nursing, Medical and Care recording the steepest growth.

Retail and Hotel and Catering saw the sharpest falls in vacancies.

On the temporary side, seven of the monitored sub-categories recorded higher demand, led by Blue Collar and Engineering, while short-term retail work suffered the most pronounced drop.

London and the Midlands both returned to growth in permanent hiring, with the capital reaching a near four-year high, while the South and North of England recorded further declines.

Temp billings headed the other way, with the North of England posting the steepest increase, followed by London, a milder rise in the South and a slight fall across the Midlands.

“Despite ongoing uncertainty it’s encouraging that businesses are starting to press ahead with investment, which means across the board we are starting to see the data moving in the right direction,” said Callum Licence, Group Head of Advisory at KPMG UK and Switzerland.

“This is most pronounced in the continued rise of temporary work, where employers have been looking at flexible approaches and hiring has been growing for several months, and permanent hiring is starting to turn a corner.”

“Rays of light are beginning to break through for the job market as employers revive hiring plans,” said Maxine Bligh, Chief Membership and Innovation Officer at the Recruitment and Employment Confederation.

“Remarkably, this is the first month without a decline in permanent placements since Liz Truss resigned as Prime Minister in 2022, underlining just how prolonged the downturn in permanent hiring has been.”

The survey measures the direction of change from one month to the next rather than the number of jobs filled, so a stable reading means hiring has stopped shrinking rather than that it has started growing.

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