Growing market uncertainty contributed to a sharper fall in permanent hiring in the UK in April as overall business confidence weakened amidst geopolitical tensions and cost pressures.
The latest UK Report on Jobs by KPMG UK and the Recruitment and Employment Confederation (REC) found that the conflict in the Middle East has further clouded the economic outlook for employers, weighing on recruitment activity and wage growth.
Last month, permanent hiring in the UK fell at the sharpest pace since January. The Permanent Placements Index — the report’s main hiring measure — was 47.5, down from 49.2 in both March and February and further below the neutral level of 50.
Demand for staff also continued to soften. The report’s Total Vacancies Index extended its decline to 2½ years, although the pace of contraction in April was the slowest in nearly a year.
Pay growth remained subdued. Starting salaries for permanent employees rose slightly compared with March, but the increase was still below the survey’s long-run average. Temporary pay growth also improved slightly from March but remained historically low.
“So far this year we’ve seen signs of improving momentum, but that is now being tempered by the economic effects of the Gulf conflict,” Neil Carberry, the REC’s chief executive, said in the report. “Businesses will be particularly concerned about the impact on inflation, their borrowing costs, and any disruption to wider supply chains.”
According to recruiters surveyed, some employers have taken on extra staff to assist with business development and expansion plans, with a preference for short-term staff, given the overall uncertainty.
Consequently, temporary hiring increased at the start of the second quarter (50.4 in April vs. 48.4 in March in the Temporary Billings Index) — the strongest increase in 2½ years, the report said.
Staff availability remained elevated. The seasonally adjusted Total Staff Availability Index was at 61 in April, signalling a continued rise in candidate numbers despite a slight easing from the previous month.
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