The latest KPMG and REC, UK Report on Jobs: London signalled a less positive picture in September, especially relative to the start of the third quarter. While permanent placements continued to rise, the pace of growth eased further from that seen in July to one which was only marginal and weaker than the UK-wide average. Moreover, temp billings registered a fresh fall, thereby ending a four-month sequence of growth. The reduction in temp billings coincided with a renewed and sharp decrease in temp vacancies, which was also the first seen in five months. Meanwhile, demand for permanent workers continued to improve, though only modestly.
At the same time, pay inflation moderated further. Starting salaries and hourly temp wages rose to their weakest degrees in six and four months respectively.
The KPMG and REC, UK Report on Jobs: London is compiled by S&P Global from responses to questionnaires sent to around 100 recruitment and employment consultancies in London.
Commenting on the latest survey results, Anna Purchas, Vice Chair & London Office Senior Partner at KPMG UK, said:
“September’s figures point to a London jobs market that is resilient. London was one of only two English regions where demand for permanent staff increased in September. That tells us that talent remains in demand in the capital, even as businesses are being careful about taking on additional costs.
“With the Budget approaching, the government has an opportunity to give businesses the confidence they need to invest in hiring and create more jobs. London’s success is built on its talent, and attracting, developing and retaining the people our businesses need is both one of their biggest priorities and one of the capital’s greatest opportunities.”
Marginal rise in permanent placements
Recruiters in London recorded a rise in permanent placements at the end of the third quarter. Where growth was recorded, respondents cited increased business activity which had boosted hiring at clients. That said, the pace of increase eased further to indicate only a slight rise, and one which was notably weaker than at the start of the quarter when the current sequence of growth commenced.
Permanent new joiners also rose at the UK level, with the pace of expansion outpacing that seen in London.
Following four consecutive months of growth, a marked fall in temp billings was reported in September. In fact, the respective seasonally adjusted index fell for a second month running to the lowest since March. According to anecdotal evidence, the completion of contract roles, as well as the non-replacement of leavers were factors underlining the decrease.
Moreover, of the four tracked English regions, London was the only area to register a decline in billings received from temporary workers.
Permanent vacancies rose across London during September, stretching the current run of growth to six months. The pace of increase was modest, and slightly stronger than seen in August.
Alongside London, the North of England was the only other tracked English area where demand for permanent staff improved. Decreases in vacancies were seen in the Midlands and South of England.
After four consecutive months of growth, demand for temporary staff deteriorated in the capital in September. Moreover, the downturn was solid and most marked since March.
Of the four tracked English regions, only the North of England recorded a rise in temp vacancies.
Upturn in permanent staff supply eases notably
The latest data indicated a rise in permanent staff supply across London, thereby extending the current run of growth to 46 months. Recruiters often cited redundancies as a key factor underpinning the uptick. That said, the pace of growth eased notably over the course of the month to the second-weakest in the aforementioned sequence, slightly ahead of that seen in March 2023.
Moreover, the upturn in permanent staff availability across London was the weakest of the four monitored English regions. Growth was the steepest in the North.
A forty-fifth successive monthly rise in temp staff supply was recorded across London in September. According to anecdotal evidence, redundancies were reportedly behind the latest increase. Although marked, the rate of growth eased notably since August to the weakest in three years.
In fact, of the four tracked English regions, London saw the number of available temp candidates rise to the weakest degree.
Starting salary inflation weakest in six months
Starting salaries awarded to permanent joiners in London rose modestly during September. Competition to secure suitable candidates and cost of living pressures pushed up salary growth, according to survey members. That said, the pace of increase eased further to the slowest since March, and was weaker than both the historical and UK averages.
The seasonally adjusted Temporary Wages Index posted above the neutral 50.0 threshold to signal an increase in pay for short-term staff across the capital for a sixth month running in September. The pace of temp wage inflation was in line with that seen across the UK as a whole, but the slowest in four months and weaker than the long-run average.
Maxine Bligh, Interim Chief Executive at the Recruitment and Employment Confederation (REC), said:
“The permanent jobs market is revving its engine, with permanent placements in London rising for a third consecutive month. As a key piston in the engine of the UK economy, London’s recovery is an encouraging sign. Permanent vacancies also keep rising in London. The downturn in temp billings last month is a surprise, but it must be seen in the context of the previous four months of growth. If this trend continues, we could see genuine momentum building across the London labour market, with permanent and temporary hiring moving broadly in the same direction. That would be encouraging for jobseekers and for the region’s economy. A Budget that gets business confidence moving again is key to maintaining momentum. The geopolitical backdrop remains challenging for government and business alike. But the Chancellor cannot seize this moment with talk of stability alone. Employers want to hear not just how we will deliver stability, but how we will go for growth.”
Feature image by Vitaly Gariev from Pexels
