Candidate supply continues to fall sharply

The monthly ‘Report on Jobs’ published today by The Recruitment and Employment Confederation (REC) and KPMG highlights the continued rise in vacancies with the availability of candidates declining.

The number of people placed in permanent jobs continued to increase in December, with the rate of expansion accelerating to the sharpest since March 2010. Growth of temporary billings reached its fastest pace for over 15 years.

Average starting salaries for those placed in permanent jobs increased further in December, with the rate of growth the strongest since October 2007.  The index tracking permanent salaries remained above its long-run trend. December data indicated that permanent salaries rose in three English regions, led by the South. At UK level, the overall rate of salary inflation accelerated to the strongest in over six years.

Temporary/contract staff hourly pay rates rose at a solid pace that was slightly slower than in November. However, the availability of staff to fill permanent job roles in all four English regions continues to fall with the reduction recorded in December the steepest since November 2004.  Although easing slightly from November’s nine-year record, the rate of decline in temporary/contract staff availability remained substantial. The sharpest contraction was seen in the Midlands, followed by London, the South and the North.

Average hourly pay rates for temporary staff rose in all four regions; the fastest increase was signalled by recruitment consultants in the Midlands, followed closely by those in London.

Candidate-ShortageStaff Categories

Demand for staff remained much stronger in the private sector than in the public sector, according to the latest survey data. In the private sector, marked rates of vacancy growth were signalled for both permanent and temporary workers. Public sector demand for permanent staff stagnated in December, whereas temporary vacancies rose at a solid pace.

Overall during December demand increased for all nine permanent staff categories covered by the survey. The strongest rate of expansion was signalled for Executive/Professional workers. Nursing/Medical/ Care, IT & Computing and Accounting/Financial also registered strong rates of growth. Higher levels of demand were signalled for each of the nine temporary/contract staff categories. IT & Computing posted the fastest growth, with Nursing/Medical/Care and Accounting/Financial completing the top three places in the demand for staff “league table”.

The Midlands

Registered the steepest increase in permanent placements since October 1997, along with the fastest growth of temporary billings throughout the UK during December; permanent salaries grew for the ninth month running.   However, of the four English regions surveyed, the Midlands saw the sharpest decline in both temporary and permanent candidate availability in December.

Permanent placements increased for the seventeenth successive month in December and at the joint-sharpest pace in over 16 years of data collection. A number of respondents cited an increase in clients as a key driver behind the latest rise in permanent appointments. Permanent candidate numbers fell steeply marking the eighth consecutive month of decline in permanent candidate availability, while that of temporary staff fell for the fifth month running, markedly sharper that that recorded across the UK, though the pace of decline eased slightly from November.

Growth in temporary billings picked up from the previous survey period, with the pace of expansion well above the historical series average attributed to increase in demand for labour, particularly the health and social care sector.

In December, growth in temporary pay rates in the Midlands outstriped UK average marking the ninth successive monthly increase in permanent salaries; the pace at which salaries grew accelerated slightly from November, though failed to match October’s six-year high. Contract pay in the Midlands rose for the eleventh successive month.

The North

Followed the Midlands with the increase of permanent places with the growth rate sharper and closer to August’s survey peak. The survey recorded the second-sharpest rise in temporary billings, stretching the current period of expansion to eight months, with the rate of increase stripping the UK trend increasing faster than in London and the Midlands.  Average permanent salaries rose at strongest pace in over six years.

The availability of candidates for permanent vacancies in the North fell in December, as has been the case in each month since February 2013. Despite being steep and faster than the long-run series average, the rate of contraction was weaker than that seen across the UK as a whole.

Recruitment consultants in the North of England reported lower temporary staff numbers in December, marking a three-month sequence of contraction. However, the overall rate of decrease eased since the previous month and was slower than the UK average.

During December, average salaries awarded to staff placed in permanent positions across the North rose at the fastest pace since November 2007. The rate of salary inflation was robust and the strongest in over six years. Moreover, the index tracking permanent salaries remained above its long-run trend. Temporary pay rates in the North of England’s labour market rose at the quickest pace since March 2008, however the overall rate of wage inflation was slightly slower than the UK-wide trend and much weaker than that seen for permanent salaries.

London

Saw its steepest drop in permanent candidate supply since August 2006, extending the ongoing sequence of growth to seven months, with permanent salary inflation continuing to outpace growth in terms of temporary rates.

London-based recruitment consultancies also recorded a faster increase in temporary billings than one month before. The degree to which temporary billings rose was in fact the most marked since January 2010, and in line with that registered at the UK level.

December’s survey showed a sharp increase in the demand for staff in the capital. Vacancies for permanent positions rose to the greatest extent since January 2001, while growth in temporary vacancies was the strongest since July 2007. On both fronts, demand increased more rapidly in London than at the UK level, a reversal of the trend one month previously.

The availability of temporary candidates in London fell at an accelerated pace in December. The respective seasonally adjusted index was at a level consistent with a marked rate of decline, and one that was virtually equal to that recorded for the UK as a whole.

Salary inflation in the capital eased slightly in December, with the rate of increase down marginally on November’s 41-month high, although still strong in the context of historical survey data. Meanwhile, the rate at which temporary pay increased was little-changed from preceding survey period. December marked the tenth successive month in which temporary hourly rates have increased.

The South (excluding London)

The sharp acceleration in growth of permanent placements in the south reached a near-record high with permanent salaries increase at strongest rate since July 2007. Demand for permanent workers also rose at quickest pace in almost 16 years. Permanent candidate supply continues to fall sharply.

Recruitment agencies in the South reported the sharpest increase in the number of people placed in permanent jobs since October 1997 – over sixteen years – during the final month of 2013. The current sequence of growth was extended to 17 months.

The rate of growth in agency temporary billings across the South of England slowed for the fourth time in five months during December, registering the slowest overall increase, while demand for permanent staff increased for the fifty-second month in a row in December, the fastest rate of growth since April 1998.

The pace of expansion in demand for temporary staff in December was the quickest since August; the second-strongest in 13 years. The number of candidates for temporary positions declined for the fifth time in six months during December. Moreover, the rate of contraction was the quickest since June 2007.

The supply of permanent candidates fell for the sixth month running in December, the longest sequence of decline in nearly six yearsPermanent salary growth continued to accelerate in December with the rate of inflation the strongest since July 2007, and the fastest among all four English regions.

Salaries offered to new permanent starters rose strongly and pay rates for temporary staff increased, continuing the trend observed in each month since April 2012. The rate of growth eased from November’s four-month high, but remained strong overall.

Kate-Shoesmith

Kate Shoesmith – Head of Policy – The Recruitment and Employment Confederation
The UK labour market is starting the New Year in robust form. Our latest figures show sharp growth in the number of people finding new permanent jobs and the most rapid rise in starting salaries since October 2007. Increasing demand for temp workers has driven up hourly pay rates for agency workers for the eleventh month on the trot. Growing confidence means more and more employers are willing to invest in their workforce and take on more people.

The real concern now is the mismatch between demand and supply with recruiters reporting that they can’t source suitable candidates for vacancies in a whole range of sectors. Companies want to hire more salespeople, accountants and businesses development staff to help their enterprises grow, but can’t find people with the right skills to take the jobs.

Bernard-Brown-KPMGjpg

Bernard Brown – Partner and Head of Business Services at KPMG
Combine the latest job figures with news that business confidence has reached a new high and it’s easy to share the renewed sense of optimism amongst employers. Permanent placements alone have hit a 4-year peak and with temporary hires accelerating to a 15-year high there is clearly room for corporate investment and, with it, job creation. Little wonder there is speculation suggesting Mark Carney might revise the unemployment benchmark at which an interest rate rise will be considered.

The recovery is clearly gaining momentum, but it will remain delicate until exports show stronger growth. As a result employers and individuals, alike, will be keeping an eye on interest rates and the impact any changes have on the pound in their pocket before deciding if a new job is the way to go. Some uncertainty still remains because the availability of staff to fill roles has seen a steep fall – the biggest for almost 10 years. It’s a particularly strong pattern in the Midlands and across London, and one which should be monitored carefully. The risk is that if it continues employers who are desperate to fill a gap could become stretched beyond their means at the same time as over-inflating the market by offering high salaries just to tempt employees to move.

Summary: Sally-Anne Rogers

Full reports and historical data from the ‘Report on Jobs’ are available by subscription via economics@markit.com

Steve Bebbington
Client Partner
enquiries@jobstheword.co.uk
0207 193 0220

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