KPMG and REC, UK Report on Jobs - October 2022
Hiring slows in September amid weaker economic outlook and candidate shortages.
Hiring slows in September amid weaker economic outlook and candidate shortages.
Key findings
Weakest rises in perm placements and temp billings for 19 months
Vacancies expand at slowest rate since February 2021
Candidate shortages and cost of living pushes up rates of pay
Data collected September 12-26
Summary
The latest KPMG and REC, UK Report on Jobs survey, compiled by S&P Global, pointed to a further slowdown in recruitment activity across the UK at the end of the third quarter. Permanent staff appointments and temp billings expanded at the weakest rates in over a year-and-a-half, as uncertainty over the outlook and limited staff supply hampered growth.
At the same time, overall vacancy growth continued to ease, with both permanent and temporary staff demand rising at the softest rates since February 2021. The downturn in candidate availability meanwhile abated only slightly, which combined with the rising cost of living drove further steep increases in starting salaries and temp pay.
The report is compiled by S&P Global from responses to questionnaires sent to a panel of around 400 UK recruitment and employment consultancies.
Recruitment activity slips to 19-month low in September
Relatively strong demand for staff and efforts to boost capacity supported a further increase in hiring activity at the end of the third quarter. However, the weaker economic climate and candidate shortages dampened overall growth. Notably, recruiters signalled the slowest increases in permanent staff appointments and temp billings for 19 months, with the former seeing only a mild expansion overall.
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Temporary Billings
50.0 = no-change
Growth of demand for staff weakest since February 2021
Overall vacancy growth softened for the sixth month in a row in September, to mark the slowest rise in demand for staff since February 2021. Weaker increases were signalled for both permanent and temporary vacancies, with the former noting the softer rate of expansion.
Pay pressures ease only slightly
The rising cost of living and competition for scarce workers drove further marked increases in starting pay for both permanent and short-term workers in the latest survey period. This was despite the rate of starting salary inflation moderating further from March's all-time record to a 15-month low. Temp wage growth also edged down to its weakest since June 2021.
Candidate supply continues to fall at historically sharp pace
Although there were further signs of the downturn in labour supply easing in September, candidate numbers continued to fall sharply overall. Permanent staff availability deteriorated at a
quicker pace than that seen for temp workers. A key factor weighing on candidate numbers was a greater hesitancy among people to apply for new roles, driven by fears over the economic outlook. A generally low unemployment rate, skills shortages and Brexit also weighed on candidate availability.
Regional and Sector Variations
Data split by region showed that London registered the steepest increase in permanent staff appointments. Upturns were relatively mild in the North of England and the Midlands, while the South of England saw the first reduction in 19 months.
Billings expanded at a softer rate in London and the South of England, but at a quicker rate in the North of England. The Midlands meanwhile registered a decline in temp billings for the first time in 27 months, albeit one that was modest overall.
The steepest increase in demand for staff was seen for temporary workers in the private sector during September. The softest expansion was meanwhile seen for permanent vacancies in the public sector. Notably, growth of demand slowed across all categories with the exception of temporary staff in the public sector.
Growth of demand for permanent staff softened across nine of the ten monitored job categories in September, with Retail the sole exception. The strongest increase in permanent vacancies was signalled for Nursing/Medical/Care, while the weakest was seen for Construction.
Secretarial/Clerical saw the quickest rise in temporary vacancies during September, and was one of the two categories which did not register slower growth compared to August. Executive/Professional meanwhile saw the slowest increase in temp staff demand.
Commenting on the latest survey results, Claire Warnes, Head of Education, Skills and Productivity at KPMG UK, said:
"The UK jobs market remained tight in September, with candidate shortages impacting recruiters’ abilities to fill jobs. Deepening economic uncertainty has also meant that workers are choosing to stay put in current roles, rather than apply for new roles, leading to a moderation in the overall rate of vacancy growth. Some employers, even those who anticipate that the recession may be short, are taking steps now to contain costs, including hiring freezes. Those employers who continue to invest in their workforce, particularly upskilling, may find they weather the recession better and will be in a stronger position to benefit from the upturn as and when it comes.”
Neil Carberry, Chief Executive of the REC, said:
“The challenges we see in today’s data reflects the underlying shortage of Labour the UK faces. With unemployment at record lows, pay continues to rise for both temporary and permanent workers starting new jobs, and activity levels across the recruitment and staffing industry remain high. While any economic slowdown this winter will affect the market, the extent of shortages mean that hiring will remain a focus for employers.
“The REC has shown that failing to address these issues could cost our economy massively in the years to come. While there is much that Government can do, like reforming the failed Apprenticeship Levy, a lot of the answers lie with hiring businesses. Firms need to work with skilled recruiters on offers that will maximise the skill base we have. There has never been a more important time for business leaders to put the people stuff first.”
Comments
Commenting on the latest survey results, Claire Warnes, Head of Education, Skills and Productivity at KPMG UK, said:
"The UK jobs market remained tight in September, with candidate shortages impacting recruiters’ abilities to fill jobs. Deepening economic uncertainty has also meant that workers are choosing to stay put in current roles, rather than apply for new roles, leading to a moderation in the overall rate of vacancy growth. Some employers, even those who anticipate that the recession may be short, are taking steps now to contain costs, including hiring freezes. Those employers who continue to invest in their workforce, particularly upskilling, may find they weather the recession better and will be in a stronger position to benefit from the upturn as and when it comes.”
Neil Carberry, Chief Executive of the REC, said:
“The challenges we see in today’s data reflects the underlying shortage of Labour the UK faces. With unemployment at record lows, pay continues to rise for both temporary and permanent workers starting new jobs, and activity levels across the recruitment and staffing industry remain high. While any economic slowdown this winter will affect the market, the extent of shortages mean that hiring will remain a focus for employers.
“The REC has shown that failing to address these issues could cost our economy massively in the years to come. While there is much that Government can do, like reforming the failed Apprenticeship Levy, a lot of the answers lie with hiring businesses. Firms need to work with skilled recruiters on offers that will maximise the skill base we have. There has never been a more important time for business leaders to put the people stuff first.”
Contact
KPMG
Chris Mostyn
Deputy Head of Media Relations
T: +44 (0)7512 448000
REC
Shazia Ejaz
Director of Campaigns
T: +44 (0)20 7009 2157
S&P Global
Annabel Fiddes
Economics Associate Director
S&P Global Market Intelligence
T: +44 (0)1491 461 010
Sabrina Mayeen
Corporate Communications
S&P Global Market Intelligence
T: +44 (0) 7967 447030
Methodology
The KPMG and REC, UK Report on Jobs is compiled by S&P Global from responses to questionnaires sent to a panel of around 400 UK recruitment and employment consultancies.
Survey responses are collected in the second half of each month and indicate the direction of change compared to the previous month. A diffusion index is calculated for each survey variable. The index is the sum of the percentage of ‘higher’ responses and half the percentage of ‘unchanged’ responses. The indices vary between 0 and 100, with a reading above 50 indicating an overall increase compared to the previous month, and below 50 an overall decrease. The indices are then seasonally adjusted.
Underlying survey data are not revised after publication, but seasonal adjustment factors may be revised from time to time as appropriate which will affect the seasonally adjusted data series.
For further information on the survey methodology, please contact economics@hismarkit.com.
Full reports and historical data from the KPMG and REC, UK Report on Jobs are available by subscription. Please contact economics@hismarkit.com.
About KPMG
KPMG LLP, a UK limited liability partnership, operates from 22 offices across the UK with approximately 15,300 partners and staff. The UK firm recorded a revenue of £2.43 billion in the year ended 30 September 2021.
KPMG is a global organization of independent professional services firms providing Audit, Legal, Tax and Advisory services. It operates in 145 countries and territories with more than 236,000 partners and employees working in member firms around the world. Each KPMG firm is a legally distinct and separate entity and describes itself as such. KPMG International Limited is a private English company limited by guarantee. KPMG International Limited and its related entities do not provide services to clients.
About REC
The REC is the voice of the recruitment industry, speaking up for great recruiters. We drive standards and empower recruitment businesses to build better futures for their candidates and themselves. We are champions of an industry which is fundamental to the strength of the UK economy. Find out more about the Recruitment & Employment Confederation at www.rec.uk.com.
About S&P Global
S&P Global (NYSE: SPGI) S&P Global provides essential intelligence. We enable governments, businesses and individuals with the right data, expertise and connected technology so that they can make decisions with conviction. From helping our customers assess new investments to guiding them through ESG and energy transition across supply chains, we unlock new opportunities, solve challenges and accelerate progress for the world.
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