Job market continued to slow in January

Januaryís Report on Jobs, from the Recruitment and Employment Confederation and KPMG, showed that the UK labour market continued to slow at the start of 2008. Softer growth of demand for staff resulted in subdued rises in permanent placements and temp billings. Meanwhile, pay growth weakened further, in part reflecting easing skill shortages.

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.

Alan Nolan, Director at KPMG comments: ìWhilst the rate of expansion continues to slow, January's data still show growth in both permanent and temporary placements. Despite predictions of redundancies and the financial market gloom, employers still remain optimistic. For example, many companies are planning to take on an increased number of graduates this year.

Different sectors carry on being affected in different ways. Whilst workers in the construction industry remain in demand, investment banks are seeing a reduction in graduate salaries in a bid to level out the playing field. Employers will wait and see whether the uncertainty in the job and the financial markets will lead to further interest rate cuts.î

Helen Reynolds, Acting Chief Executive Officer, Recruitment and Employment Confederation (REC) comments: ìThis monthís Report on Jobs confirms that whilst people are still recruiting, the rate of growth in demand for jobs continues to slow. In such a delicate economic climate, now is not the time to start hampering job creation with new regulations on temporary work. A private members bill on temporary agency work is due to be debated in Parliament later in the month and has already attracted strong trade union support. REC believes that the bill would simply limit temping job opportunities through added bureaucracy. It is vital that we preserve the flexibility which temporary work has brought our economy at this pivotal time for our successful jobs market.î

- Subdued growth of placements and billings...

Growth of permanent staff placements remained lacklustre in January, and was only marginally sharper than the four-and-a-half year low recorded in December. Temporary/contract staff billings increased at the slowest pace for twenty-two months.

- ...as demand for staff rose at a slower pace

The rate of expansion of demand for permanent staff eased to a twenty-six month low in January. Growth of demand for temporary/contract staff also slowed, hitting a seventeen-month low.

- Pay inflation continued to weaken...

Although still at a robust level, inflation of permanent staff salaries slipped to a twenty-two month low in January and was well below the elevated rates seen last summer. Temporary/contract staff pay inflation eased slightly to its weakest for a year-and-a-half.

- ...as skill shortages eased

Latest data suggested that candidate shortages eased further in January. The availability of permanent staff fell at its slowest pace for two-and-a-half years, while temporary/contract staff availability declined at the weakest rate for ten months.

Growth of permanent staff placements was only marginally stronger than Decemberís four-and-a-half year low in January, while temporary/contract staff billings rose at the weakest rate for twenty-two months.