The latest KPMG and REC, UK Report on Jobs: London survey noted that the downturn in hiring activity continued into August, with both permanent placements and temp billings falling further.
However, in both cases rates of reduction eased sharply from those seen in July.
Nonetheless, demand for workers continued to deteriorate, while the supply of candidates across the capital rose markedly.
Many comments from recruiters attributed this increase in supply to redundancies, highlighting a challenging environment for job seekers.
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.
Anna Purchas, London Office Senior Partner at KPMG UK, said: “London’s jobs market remains under pressure, with both permanent and temporary hiring down in August. The positive news is that the pace of decline has slowed, which suggests conditions may be starting to stabilise.
“At the same time, more people are looking for work, and in August the rise in candidate availability was the fastest we’ve seen in over two years and higher than the national average. That makes it a tough market for jobseekers, but it gives employers a real chance to tap into a wide pool of experienced talent. With pay pressures relatively subdued, those businesses that are ready to invest now will be in a strong position to secure the skills they need for the future.”
Downturn in new permanent joiners weakest in four months
Permanent placements across London fell solidly in August, thereby stretching the current run of reduction to five months. Recruiters reported a weak demand climate and tightened budgets. That said, the respective seasonally adjusted index ticked up further from June’s recent low, printing a four-month high that exceeded the national average.
All of the four monitored English regions recorded a reduction in permanent placements in August, with the South of England leading the downturn and being the only area where the pace of contraction quickened on the month.
Billings received from the employment of temporary workers across the capital fell for a twentieth straight month in August. Completion of contracts and non-renewals were reasons cited for the latest downtick. That said, the pace of decrease eased noticeably from that seen in July, to indicate only a modest decline which was the weakest in three months.
Three of the four monitored English regions reported a reduction in temporary billings, with only the Midlands defying the trend by recording a fresh increase.
Demand for permanent workers across London deteriorated for a thirteenth straight month in August. Moreover, the rate of decline quickened for a third month running to the fastest since October 2020.
Of the four monitored English areas, only the South of England recorded a stronger rate of decline in permanent vacancies than that seen in London.
Meanwhile, temp vacancies fell solidly in London, but at a pace that was weaker than seen in July. Contractions have been noted in each of the past 12 months.
All of the tracked regions saw their respective seasonally adjusted indexes tick up on the month, with the Midlands even noting a slight rise in temp vacancies.
Marked rise in permanent staff availability
August data signalled a marked rise in the supply of permanent staff available across the capital, thereby extending the current sequence of increase to 33 months. Moreover, the pace of expansion was the fastest in over two years and outpaced that seen at the UK level. Recruiters observed that this latest uptick was driven by redundancies and a growing number of senior workers seeking new roles.
Permanent staff supply rose more quickly across all of the four monitored English regions.
The supply of short-term workers expanded substantially in London in August. Growth has now been recorded in each of the past 32 months. The rate of increase accelerated notably from July to signal the sharpest expansion since December 2020. Redundancies and the increased desirability of temp roles, especially for work from home, were reasons cited for the latest rise.
Of the four monitored English regions, London recorded the sharpest rate of temp staff supply expansion. The remaining three monitored regions also registered faster rates of growth than in July.
Permanent salary inflation unchanged in August
The seasonally adjusted Permanent Salaries Index was unchanged on the month in August, and signalled only a mild increase in starting salaries awarded to new permanent joiners across the capital. Moreover, the pace of inflation was one of the weakest since the COVID-19 pandemic and historically subdued.
That said, London and the Midlands were the only two monitored English areas where permanent salaries rose. Meanwhile, the South of England and the North of England recorded fresh decreases.
Temp pay rates in London increased for an eleventh straight month in August. Moreover, after accelerating notably since July, the pace of temp wage inflation was the fastest in two years.
Additionally, of the four monitored English regions, temp wage inflation was the strongest across the capital. Temp wages also increased in the Midlands, but fell in the South and North of England.
Jon Holt, Group Chief Executive and UK Senior Partner KPMG, said: “London’s jobs market remains under pressure, with both permanent and temporary hiring down in August. The positive news is that the pace of decline has slowed, which suggests conditions may be starting to stabilise.
“At the same time, more people are looking for work, and in August the rise in candidate availability was the fastest we’ve seen in over two years and higher than the national average. That makes it a tough market for jobseekers, but it gives employers a real chance to tap into a wide pool of experienced talent. With pay pressures relatively subdued, those businesses that are ready to invest now will be in a strong position to secure the skills they need for the future.”
Neil Carberry, REC Chief Executive, said: “Employers need a shot of confidence along with their seasonal flu jabs this autumn. August saw recent declines in the market moderating, and a few positive signs – such as the hiring downturn across London shows signs of cooling.
“There is certainly potential out there – but with fewer vacancies and more candidates looking for work in London and across the UK, the overall picture is still subdued. While we have seen a summer slowdown, we will hopefully see more positive signs when the September data come through next month.
“All eyes are now on the Autumn Budget, in hope now that the Chancellor won’t do any further damage to the labour market with costs on hiring. For the economy to thrive, the Budget must recognise the need for investment in people. Long-term investment in skills, workforce stability, a more practical approach to the Employment Right Bill and meaningful partnerships with employers will yield far more enduring returns than short-term fixes.”
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