May 2024 job market report

“What’s the UK job market like?”

The May 2024 KPMG & REC UK Report on Jobs is now out.

“Permanent staff placements down again in April, but pay growth accelerates”.

The latest KPMG & REC UK REPORT ON JOBS has been published featuring survey results from mid-late April 2024.

The full report is posted here

Jon Holt, Chief Executive and Senior Partner of KPMG in the UK commented: “UK CEOs continue to grapple with the Bank’s hawkish stance on interest rates, and will no doubt hope April’s survey data is another marker in the sand on the journey towards a summer cut. Companies would then have the confidence and certainty to press go on their investment strategies.”

Neil Carberry, REC Chief Executive, said:

“The critical moment in any labour market slowdown is the point at which demand starts to turn around. Today’s hiring data suggests that point is close.”

Key findings are:

  • Slower falls in permanent and temporary staff appointments
  • Pay rates improve in April
  • Slower falls in staff demand signalled
  • Fastest increase in staff availability since last November
  • Seven out of ten sectors experienced a drop in permanent vacancies
  • The sharpest fall in demand was recorded in the Retail category, followed by Construction and Executive/Professional

Appointments

The number of staff appointed to permanent positions by UK recruitment consultants continued to decline in April. This marked the nineteenth consecutive month of reduction. However, the seasonally adjusted Permanent Placements Index rose to a ten-month high, albeit still -ve, indicating a noticeably slower rate of contraction.

Panellists reported increased caution among clients, with companies holding back on recruitment. A shortage of suitable candidates was also noted.

Throughout the year so far, permanent candidate numbers have declined across all English regions, with the steepest reduction again observed in the South of England.

Vacancies

Slower decline in staff demand

April’s seasonally adjusted Total Vacancies Index remained below the crucial 50.0 no-change mark, indicating a continued decline in demand for staff. However, the rate of contraction was modest and the slowest since January.

Permanent & Temporary Roles

Permanent staff vacancies declined for the eighth consecutive month in April. However, the rate of contraction was modest and continued to ease from February’s 37-month record. Demand for temporary workers also fell for the third consecutive month, but only slightly, marking the weakest decline in the current sequence.

Sector-Specific Trends

Private sector vacancies for temporary staff increased modestly in April, marking the first rise in three months. Demand for permanent staff in the private sector continued to decline, but at a slower rate than in March. In the public sector, vacancies for both permanent and temporary staff decreased again in April. However, the rates of decline for both were softer compared to the previous month.

In April, seven out of the ten broad sectors covered by the survey registered a drop in demand for permanent staff, led by the Retail category. Among the three sectors where growth was noted, Engineering experienced the strongest increase.

Recent statistics from the Office for National Statistics (ONS) reveal a continuation of the downward trend in UK job vacancies over the three months leading up to March.

The latest figures from the Office for National Statistics (ONS) show a reduction of 13,000 vacancies compared to the three months to December, bringing the total number of job vacancies to 916,000. This marks the 21st consecutive quarterly decline.

Although vacancy numbers are over 200,000 lower than a year ago, they remain approximately 120,000 higher than the pre-pandemic level of 796,000 recorded in the three months to March 2020.

Staff availability

Fastest growth in candidate supply for five months

Candidate numbers surged again in April, with the growth rate accelerating to the highest recorded since last November. After adjusting for seasonal factors, the Total Staff Availability Index rose to 60.4 from 60.2 in March. Growth has now been recorded for 14 consecutive months.

Both permanent and temporary candidate supplies increased at similarly sharp rates in April. The survey data indicated a stronger rise in permanent staff availability, reaching its highest growth rate in five months. Panellists noted that a high number of redundancies, along with more people looking for work, bolstered permanent staff availability.

Strong increases in permanent staff availability were recorded across all English regions, with the steepest growth in London and the slowest in the Midlands.

Pay pressures

Starting salaries rise at quicker pace

Permanent starting salaries continued to rise in April, marking 38 months of continuous inflation. The rate of increase accelerated to its highest level of the year so far, although it remained below the long-term trend. Panellists noted that beyond the usual seasonal impacts of annual pay awards and changes in the national minimum wage, competition for quality candidates, who remain in short supply, had driven up starting salaries.

For temporary workers, typical pay rates also increased in April, extending the inflation period to 38 months. The rate of increase was the highest since June 2023. Candidate shortages and market competition were cited as factors underpinning pay inflation.

ONS Data released in April covered the period to February 2024. Total employee earnings (including bonuses) continued to rise on an annual basis during the three months to February. However, the rate of inflation remained unchanged from January’s 18-month low of 5.6%.

There was a notable divergence between the performance of the private and public sectors in this period. Public sector earnings rose at a faster rate of 6.1%, compared to 5.8% previously. Conversely, private sector pay growth softened slightly, dropping to 5.6%, the lowest level since the beginning of 2022.

London job market

KPMG and REC also produce a London job market analysis.

Permanent placements fall at weakest rate for four months

Permanent placements fell across the capital in April, marking the nineteenth consecutive month of decline. While the overall rate of decrease was solid, it eased to a four-month low and was less severe than the UK average. Surveyed recruiters attributed the downturn in hiring to deteriorating demand for labour and ongoing economic uncertainty.

The seasonally adjusted Permanent Staff Availability Index indicated a seventeenth successive monthly rise in permanent candidates available in London during April. The rate of growth quickened to a four-month high, having picked up further from February’s recent low. Redundancies were cited as a factor increasing the supply of workers.

Among the four monitored English regions, London recorded the strongest expansion in permanent staff supply.

After easing to a 37-month low in March, permanent salaries for new joiners in London rose at a quicker pace in April. Panellists reported that salaries were increased to attract suitably skilled candidates. However, the rate of salary inflation remained among the weakest in the current sequence of rising pay.

Among the four monitored regions, only the South of England reported a weaker increase in starting salaries than London.

Regional comparison

Staff Appointments

Permanent staff hiring across the UK continued to decrease at the start of the second quarter, extending the decline that began in October 2022. However, the pace of contraction eased to the joint-weakest in over a year. All four monitored English regions noted a slowdown in the fall of permanent staff appointments, with the softest downturn seen in the Midlands and the sharpest decrease in the South.

Meanwhile, temporary billings also fell across the UK in April, but at a softer pace. The overall decline was the weakest in three months, with the Midlands recording a renewed rise in temp billings. London continued to see the sharpest drop, while the North and South of England experienced further but slower contractions in temporary staff billings.

Candidate Availability

Permanent staff availability increased across the UK at a marked pace during April, with the growth rate quickening to the fastest since last November. The expansion in the supply of permanent workers was driven by substantial and faster upticks in the South of England and London. Although staff availability continued to grow in the North and Midlands, the pace of growth softened in these regions.

Temporary staff availability rose across the UK at the sharpest rate since December 2020. Except for the North, all monitored English regions saw a quicker rise in the supply of temporary workers, with the fastest uptick in London.

Pay Pressures

Permanent starting salaries across the UK increased at a faster pace in April, with the rate of inflation accelerating to the quickest in four months. The Midlands saw the steepest rise in starting salaries, though wage pressures intensified across all four monitored regions.

Hourly pay rates for temporary staff at the UK level rose at the quickest pace since June 2023. All four monitored regions recorded accelerated increases in temp pay rates, with the North experiencing the steepest uptick. London registered the slowest rise, though it was still the fastest seen in the region since last September.

The Prism Executive Recruitment perspective: management consultancy recruitment

There is little doubt that there has been a collapse in the management consulting jobs market.

The Big 4 and other large consultancies, including the usually smug strategy firms, have been pretty vigorously announcing redundancies since mid 2023 and many smaller firms have either been quietly losing perm staff, or associates.

Certainly few consulting employers have stepped into the breach to mop up the many unfortunates now out of work.

The reasons for the downturn are easy to see:

  • Over optimistic hiring in 2022
  • When the economy sneezes the consultancy sector catches a cold and recruitment pneumonia!
  • Many firms are doing OK….but the uncertainty means they are not thinking of adding to their headcount yet
  • This latest (April 9th) Source Research summary reflects on the much slower growth in the sector and helps explain some of the conflicting “straws in the wind”

Despite the downbeat tone of some parts of the latest REC/KPMG survey there are some positive signs and evidence for the cliché “the darkest hour is before the dawn”.

  • Confidence among small businesses climbed in the first three months of the year for the first time in two years
  • UK exits recession in May with figures showing fastest growth since Q4 2021
  • BoE expects inflation will fall “close” to its 2% target in the next couple of months

Other data and reports

The Institute for Employment Studies also published a key analysis in mid-May 2024 .

Their briefing note sets out an analysis of the latest Labour Market Statistics.

Commenting on the figures is a pretty downbeat statement:

“No news is bad news in today’s jobs data. Estimates of employment, unemployment and
economic inactivity are almost identical to the figures published last month, which is very
disappointing given how bad last month’s figures were. The employment rate remains
stuck at its lowest since 2017, while economic inactivity is at its highest in nearly a
decade. The last few years have seen the most significant and prolonged contraction in
the size of the labour force since the late 1980s recession, which is holding back growth
and undermining improvements in living standards.”

The REC’s Labour Market Tracker, last updated in April, offers better news with a further rebound from the seasonal Christmas dip, albeit still down overall on the earlier part of 2023.

The most recent quarterly ManpowerGroup Employment Outlook Survey for Q2 2024 remains positive.

Employers in North America (31%) reported the strongest hiring intentions, followed by Asia-Pacific (27%), South and Central Americas (both at 19%) and Europe, the Middle East and Africa (each at 15%).

By country, the strongest hiring plans are reported in India 36%, U.S. 34%, China 32% and The Netherlands 32% with the weakest Romania -2% and Israel -1%.

The UK was upper quartile, just, at 23%

The IT industry had the brightest global hiring outlook at 34%, followed by Financials & Real Estate at 29%, and Healthcare and Life Sciences at 26%

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.

For more information on the job market, or to discuss your hiring or career plans please contact Chris Sale, Managing Director, Prism Executive Recruitment via [email protected]

FAQs

For much of 2023 the job market was in decline with fewer vacancies and a surge in redundancies and so far in 2024 it has remained subdued, but with some early signs that could change
In April 2024 seven out of the ten sectors covered by the survey registered a drop in demand led by the Retail category. Among the three sectors where growth was noted, Engineering experienced the strongest increase.
Permanent placements fell across the capital in April 2024, marking the nineteenth consecutive month of decline. Among the four monitored English regions, London recorded the strongest growth in job seekers.
The softest downturn in appointments is in the Midlands and although job seeker numbers continued to grow in the North and Midlands, the pace of growth was less in these regions. The Midlands saw the steepest rise in starting salaries.

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