Downturn in hiring activity deepens in November – London Business News | Londonlovesbusiness.com

The latest KPMG and REC, UK Report on Jobs indicated a worsening downturn in hiring activity for new permanent joiners across the capital.

Since August, businesses have been reducing permanent placements. The recent Budget announcement led companies to exercise further caution in their hiring practices.

November saw the strongest decline in permanent staff placements in nine months, with a rapid overall decrease. Similarly, billings received from temporary workers fell sharply, although the rate of decline eased slightly.

Redundancies remained a key factor behind a sustained increase in candidates seeking new opportunities across the capital. Regarding pay rates, both starting salaries and temporary wages rose at rates well below their respective series averages.

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, Office Senior Partner at KPMG UK in London, said: “The London job market is clearly under pressure, with new permanent placements dropping at the fastest rate in nine months. While this is the continuation of a slow decline since August, it’s likely that businesses are tightening their belts in light of the increase in National Insurance announced in the Budget. For job seekers, though, it’s a tough market.

“That said, there’s a silver lining for employers, as a larger pool of candidates gives them access to talent at more competitive salaries.

“The focus now should be on adaptability – employers in London are rethinking workforce strategies to maximise short- and longer-term productivity – balancing technology costs and investment in skills – whilst candidates who upskill and stay versatile will stand out.”

Permanent placements fall at strongest pace in nine months  

November data revealed a fourth consecutive monthly fall in permanent placements across the capital. The rate of decrease quickened notably from October, marking the steepest drop in nine months and aligning closely with the UK-wide average. Recruiters attributed the decrease in hiring to waning business activity and the recent Budget announcement.

All four English regions indicated a more pronounced decrease in new permanent joiners in November, except for the Midlands, which experienced the weakest downturn.

Recruiters based in London recorded a fall in temp billings for the eleventh straight month in November. The rate of contraction was the weakest since August but continued to exceed the average for the UK as a whole. Anecdotal evidence indicated that the downturn was attributed to poor sales performance, cost-cutting measures, and economic uncertainty.

A renewed decline in temporary billings across the North resulted in the Midlands being the only monitored English region to show an increase in November. Elsewhere, London and the South of England indicated solid but milder rates of decline compared to the previous month.

Demand for permanent workers deteriorated for a fourth straight month across the capital in November. Moreover, the rate of contraction was the most marked since February and sharp overall.

For the first time in nine months, all four monitored English regions recorded a decrease in permanent vacancies.

Temp vacancies fell across the capital in November, thereby extending the current run of decrease to three months. The rate of reduction was the sharpest in 52 months, and rapid.

A renewed decline in temporary vacancies across the North of England meant that a decrease was observed in all four monitored English regions.

Sustained rise in permanent staff availability  

Continuing the trend that began in December 2022, the availability of permanent workers increased across London in November. Although easing to an eight-month low, the pace of expansion remained rapid overall and was broadly in line with the UK average. Redundancies were once again identified as the primary driver of this latest expansion.

All four English regions experienced rapid expansions in permanent candidate availability during November. However, while London and the South of England observed a slowdown in growth rates, the North of England and Midlands recorded stronger increases.

London-based recruiters reported a rise in the supply of short-term candidates in November, continuing the period of expansion seen since the beginning of 2023. Although the pace of growth moderated compared to October, it remained sharp overall. Anecdotal evidence indicated that a shortage of contract opportunities led to more short-term workers actively seeking employment.

In fact, growth rates for temp staff supply slowed down across all monitored English regions in November.

Starting salary inflation remains historically subdued   

The rate of starting salary inflation rose to a three-month high after being only marginal in the previous survey period. However, salary increases remained modest and historically subdued.

Permanent salary inflation was strongest in the North of England, while only the South posted a reduction in pay for new permanent joiners.

Back-to-back expansions in temp wages were recorded across the capital in November. Although hourly wage rates for short-term workers increased at a slightly stronger pace, the pace of inflation remained below the series average. In cases where an increase was noted, clients mentioned that it was to award higher skill levels.

The Midlands was the only one of the four monitored English regions to report a decline in temporary wages.

Neil Carberry, REC Chief Executive, said: “No one should be surprised that firms took the time to re-assess their hiring needs in November after a tough Budget for employers.

“The drop in vacancies nationally was led by private sector permanent roles, and slower permanent recruitment billings across the month also reflected this trend. The real question now is whether businesses will return to the market as they go into next year with greater certainty about the path ahead.

“The resilience of temporary recruitment offers some hope – private sector temporary hiring activity was almost flat across the country, by comparison with the drop in permanent hiring. In London, the rate of contraction in temporary billings was the weakest since August.

“Firms are likely to rest more on temps while they manage the current uncertainty, and that only serves to emphasise again the value of flexible forms of work to companies and people who need to find work quickly after redundancy. For policymakers, ensuring new regulations support rather than weaken our flexible jobs market is vital – especially after the Budget. Ensuring rules introduced by the Employment Rights Bill are tailored to protect agency and temporary work really matters for people.”