Permanent staff appointments rise for the first time in 2019

Fri, April 5th, 2019

The latest KPMG and REC, UK Report on Jobs: North of England pointed to the...

The latest KPMG and REC, UK Report on Jobs: North of England pointed to the first rise in permanent staff hiring for the region so far this year.

The report, which is compiled by IHS Markit from responses to questionnaires sent to around 100 recruitment and employment consultancies in the North of England, revealed an increase in the number of people placed into permanent job roles, alongside a rise in starting pay driven by lower candidate supply.
Recruitment firms often commented that worker availability fell because people were unwilling to move jobs amid ongoing Brexit uncertainty.

First rise in permanent staff placements for three months

Following contractions in the opening two months of 2019, the number of people placed into permanent job roles across the North of England increased during March. That said, the rate of growth was only moderate overall and softer than the historical average. According to panellists, demand for permanent workers stemmed from rising business requirements at clients. Across the UK as a whole, permanent staff placements fell for the second time in three months. Though only moderate overall, the latest fall was the fastest since July 2016. The North of England was the only monitored English region to record a rise in permanent staff appointments.

March data pointed to a sharp and accelerated rise in billings received from the employment of temporary workers in the North of England. Notably, the rate of expansion was sharp overall and the fastest since October 2018. Recruitment agencies generally linked growth to higher demand for short-term staff, with engineers and industrial workers mentioned in particular. At the national level, temp billings continued to rise, which extended the current run of expansion to nearly six years. However, the rate of growth eased from that seen in February, with softer increases in the Midlands and London, alongside a contraction in the South of England.

Demand for both permanent and temporary workers continued to increase in the North of England during March. The number of permanent staff vacancies grew at the quickest pace for four months and was faster than the UK average. Short-term positions across the region meanwhile rose solidly for the third month in a row. That said, the rate of expansion remained slower than the UK-wide trend.

Permanent labour supply falls at slightly quicker rate

As has been the case in each month since February 2013, permanent staff availability in the North of England deteriorated in March. Moreover, the rate of decline was sharp and slightly faster than in February. Anecdotal evidence suggested that the latest contraction in supply was driven by Brexit uncertainty. Permanent staff availability also fell further across the UK as a whole. The pace of decline accelerated from February, driven by quicker contractions in both the South and North of England. Meanwhile, the rate of deterioration softened in London and was broadly unchanged in the Midlands.

Recruitment consultancies based in the North of England reported a sustained fall in the supply of temp workers at the end of the first quarter. The rate of reduction accelerated from February and was quicker than the UK average for the first time since last August. As was the case with permanent candidates, the deterioration was commonly attributed to Brexit uncertainty. At the national level, temporary labour supply fell at the slowest pace since January 2017. This was driven by softer deteriorations in three of the four monitored English regions. Notably, the Midlands recorded its weakest reduction for five-and-a-half years.

Permanent starters' pay continues to rise sharply

The rate of starting salary inflation across the North of England remained historically sharp in March, despite a slight softening from February. The rise in starting pay was also quicker than the UK average for the first time in three months. Recruiters in the region suggested that both increasing demand for staff and a reduction in supply had driven up pay offers. Permanent starting salaries across the UK also rose during March. Though sharp overall, the rate of growth eased to its softest for almost two years. All four monitored English regions recorded a slower rise in permanent starting pay.

Remuneration awarded to temporary workers across the North of England continued to increase markedly in March. The latest rise extended the current run of inflation to 79 months. That said, the rate of pay growth eased to its softest since last October. At the national level, temp pay rates increased at a slower rate during March. Although the latest rise was still sharp, it was softer than the average for 2018. The UK-wide trend was largely driven by a weaker rate of inflation in the North of England and a broad stagnation of temp pay in London.

Comment

Commenting on the latest survey results, Euan West, Office Senior Partner at KPMG in Liverpool said: "The first increase in permanent hires of 2019 is encouraging, especially when viewed in the context of the North being the only English region to see an increase in permanent placings at all this month, and also alongside a backdrop of rapidly rising demand for new staff. Businesses need to be firing on all cylinders if they’re going to effectively respond to the challenges and opportunities that lie ahead. A continued contraction of the region’s labour market could threaten this, so management teams must consider how best to attract talent in a competitive skills market where permanent staff availability continues to decline.”

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