Job Growth Slows To Two and A Half Year Low

The latest Report on Jobs survey showed that the number of people placed in permanent jobs rose at the slowest rate in over two-and-a-half years in February, despite a further strong improvement in underlying demand for staff.

Meanwhile, inflation of employee pay was found to have eased since the previous month. The Report on Jobs, published today by the Recruitment & Employment Confederation and KPMG, 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.

Commenting on the latest survey results, Michael Carter, People Services Partner at KPMG said:

Compare this month’s data, which shows a further but slower increase in placements and demand from employers remaining high, with the unemployment picture, where the figures seem to be rising. A rise in unemployment could suggest that there are more skills available in the market place but this does not appear to be borne out by this month’s RoJ figures. Or it could be as a result of more people entering the labour market, either the previously economically inactive now looking for work and/or the influx of labour from continental Europe.

In some sectors the availability of candidates and the skills sought can be matched, such as in the construction sector where the labour from continental Europe can be utilised effectively. But in other sectors there continues to be a mis-match and it is this which may explain the contradictions in the available data.

Also commenting on the latest report, Gareth Osborne, REC Managing Director said: This month’s Report on Jobs should be taken as an early warning sign, like an amber light on the nation’s fuel gauge. A slowdown in UK recruitment points to a job market on the cusp of change. When combined with other key economic indicators such as low consumer confidence and rising consumer debt the sustained success of the UK labour market hangs in the balance. We are calling on the government to consider this carefully prior to the upcoming budget announcement.

* Slower growth of staff appointments...
The rates of growth of both permanent and temporary staff appointments slowed in February. The latest rise in permanent placements was the weakest in thirty-one months, while temporary staff billings increased at the least marked rate in five months.

* ...despite strengthening demand for staff

* Overall demand for staff continued to improve in February, according to recruitment consultants. Furthermore, the latest expansion was the strongest in thirteen months. Robust rates of demand growth were recorded for both permanent and temporary staff.

* Marginal rise in private sector employment
February’s PMI surveys pointed to a marginal rise in actual UK private sector employment. Staffing levels continued to expand in services and construction, but manufacturing employment fell for an eleventh successive month.

* Divergence in staff availability trends between perm and temp sectors
The availability of candidates for permanent vacancies continued to decline at a solid rate in February, suggesting ongoing skill shortages. In contrast, temporary/contract staff availability rose for a second consecutive month, with the latest improvement the strongest for two-and-a-half years.

* Easing of pay inflation
Although average wages and salaries continued to rise in February, pay inflation was weaker than in the previous month. Permanent staff salary inflation cooled to a four-month low, while temp pay rose at the slowest pace in five months.