Tightening job market exerted strong upward pressure on pay rates in May.

Report on Jobs

Tightening job market exerted strong upward pressure on pay rates in May.

The Report on Jobs, published today by the Recruitment & Employment Confederation and Deloitte, provides the most comprehensive guide to the UK labour market, drawing on original survey data provided by recruitment consultancies and employers, as well as data on national newspaper recruitment advertising.

According to the latest REC/Deloitte Report on Jobs survey, recruitment consultanciesí permanent staff placements and temporary staff billings rose strongly again in May. Underpinning growth of staff appointments was a further robust expansion of demand for staff by employers, which increased for the eleventh month running. Meanwhile, the job market showed signs of tightening at an increased rate as the availability of candidates to fill vacant positions fell at a steeper rate than in the previous month. The resulting skill shortages that stemmed from a further decline in staff availability, coupled with strong demand for staff, pushed pay rates up sharply during the month.

Commenting on the latest report, Brett Walsh, Head of UK Human Capital at Deloitte reported that: The latest Report on Jobs suggested a further marked increase in the number of new jobs being created by UK businesses in May. However, higher levels of employment meant that firms are finding it increasingly difficult to attract candidates with suitable skills and experience without offering substantially higher pay rates. Indeed, starting salaries are currently rising at a rate not seen for over three years.

Also commenting on the latest report, Gareth Osborne, Managing Director at REC reported that: It is clear that the job market is now back in full swing, with skills shortages increasing and pay increases rising. These trends put into sharp focus the benefits to the economy of allowing workers from the accession countries to enter the UK and the importance of making it quick and simple for them to enter the country.

Permanent staff placements and temporary staff billings continued to rise strongly.

The latest Report on Jobs survey showed that recruitment consultanciesí permanent and temp business expanded strongly again in May. The number of people placed in permanent jobs rose for the twelfth successive month and, de-spite easing slightly compared to April, the rate of growth of placements remained buoyant. Meanwhile, billings re-ceived from the employment of temporary and contract staff also rose for the twelfth month running in May, rising at a faster rate than April.

Solid expansion of actual employment

Ongoing growth of staff appointments continued to add to the level of private sector employment, as measured by the CIPS/Reuters Employment Index in May. Furthermore, the rate of expansion of staffing levels gathered pace compared to April, with sharper increases in employment recorded across the manufacturing, services and construction sectors.

Growth of demand for staff picked up

Rising staff placements again reflected strong demand for staff by employers in May. Furthermore, the Report on Jobs Vacancies Index suggested that the rate of growth of demand for staff was slightly sharper than that recorded a month earlier. The Index has now signalled strengthened demand for staff for eleven successive months, with expansion during the latest survey period attributed by consultancies to a general improvement in business confidence at clients. De-mand rose markedly for all main types of employee, with the sharpest increase in demand signalled for Engineering/Construction staff. Improved demand for staff was also indicated by the Press Recruitment Advertising Index. This showed the number of jobs advertised in the national press to have risen above levels of a year earlier for the second consecutive month in April.

Candidate availability continued to deteriorate

The availability of candidates to fill vacant positions at employers declined for the seventh consecutive month in May. Moreover, the sharp rate of deterioration in staff availability accelerated from that recorded a month earlier, as rising staff appointments and fewer redundancies further depleted the pool of available candidates. As a result, a wide range of skills were reported by agencies as being in short supply.

Wage inflation sharpened

Strengthened demand for staff and lower candidate availability pushed pay rates higher in May. Average salaries awarded to people starting new jobs rose for the tenth month running, whilst temporary staff pay rates rose for the twelfth month in a row. In both cases, the rates of increase were the steepest seen during the recent upturn.