The UK’s hiring activity falls sharply in June

According to the latest figures, UK hiring dropped dramatically in June. Permanent job placements fell at their fastest rate in nearly two years. KPMG and REC UK Report on Jobs.

The survey, compiled by S&P Global from around 400 recruitment consultancies, found uncertainty over the economic outlook and budget constraints led businesses to pull back on recruitment.

At the same time, the supply of candidates surged – the steepest increase since November 2020 (Covid era) – amid reports of redundancies and weaker demand for workers.

Companies continue to wait for the right time to hire, due in part, to the ongoing geopolitical turmoil and the rising cost threat, as well as the promise of technological efficiencies. But where there have been recent Government commitments, such as in housebuilding and infrastructure, we are seeing a small increase in permanent vacancies in related sectors – construction and engineering – which is encouraging,” said Jon Holt, Group Chief Executive and UK Senior Partner at KPMG.

He continued, “Global headwinds continue to affect the overall economic outlook as we move into the second part of the year. But clear priorities in the Industrial and Trade Strategies and a growth in the service sector should give business leaders the confidence they need to plan future investments and consider their hiring activity.”

Permanent roles are hardest hit by the decline in hiring

Temporary staffing also dropped at its fastest pace since February. The decline in permanent vacancies was the most dramatic, while temporary positions declined at their slowest rate in 10 months.

In the South of England, both temporary and permanent placements have declined at the highest regional rate.

Pay growth slows

As employers cut back on budgets and there were more candidates, the rate of pay growth decreased. The rates of temporary and starting salaries rose at a slower pace than in the past.

Winners and losers in the industry

Retail was the industry that saw the most dramatic drop in permanent staff demand. Eight categories reported declines. Construction and engineering were only two industries to report an increase, albeit a mild one, in permanent vacancies.

The biggest drop in the number of temporary jobs was seen for retail and secretarial positions. Construction was the exception to this trend and saw a solid increase in temporary positions.

Neil Carberry, Chief Executive of the Recruitment & Employment Confederation (REC), said there is “more volatility month by month in the jobs market” as employers hire cautiously, influenced by “scar tissue left by the Spring tax hikes” and concerns over further increases.

He also said, “clarity and transparent government are vital for building trust with business to drive recovery.”

KPMG warns that a broader sense of confidence is required before hiring resumes.

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