Stressed office worker. Credit: PeopleImages.com – Yuri A, Shutterstock.
UK hiring activity dropped sharply in June, with permanent job placements falling at their fastest pace in almost two years, according to the latest KPMG and REC UK Report on Jobs.
The survey, compiled by S&P Global from around 400 recruitment consultancies, found uncertainty over the economic outlook and budget constraints led businesses to pull back on recruitment.
At the same time, the supply of candidates surged – the steepest increase since November 2020 (Covid era) – amid reports of redundancies and weaker demand for workers.
“Ongoing geopolitical turbulence and the threat of rising costs, alongside the promise of technology efficiencies, mean companies continue to wait and see with their hiring. But where there have been recent Government commitments, such as in housebuilding and infrastructure, we are seeing a small increase in permanent vacancies in related sectors – construction and engineering – which is encouraging,” said Jon Holt, Group Chief Executive and UK Senior Partner at KPMG.
He added, “As we head into the second half of the year, global headwinds will continue to impact the overall economic outlook, but clear priorities set out in the Industrial and Trade Strategies and growth in the services sector should provide some of that confidence business leaders need to start planning future investments and to consider their hiring activities.”
Hiring decline hits permanent roles hardest
Permanent staff appointments saw the sharpest drop since July 2023, while temporary billings also fell at their fastest rate since February. The downturn in vacancies was most severe for permanent roles, though temporary positions fell at the slowest pace in ten months.
The South of England saw the steepest regional decline in both permanent and temporary placements.
Pay growth slows
With more candidates available and employers tightening budgets, pay growth cooled. Starting salaries and temporary wages rose modestly, at rates weaker than historical trends.
Industry winners and losers
Across industries, retail faced the steepest drop in demand for permanent staff among eight categories reporting declines. Construction and engineering were the only sectors to record an increase in permanent vacancies, though the rise was mild.
For temporary roles, retail and secretarial work saw the biggest drops. Construction bucked the trend, recording solid growth in short-term positions.
Neil Carberry, Chief Executive of the Recruitment & Employment Confederation (REC), said there is “more volatility month by month in the jobs market” as employers hire cautiously, influenced by “scar tissue left by the Spring tax hikes” and concerns over further increases.
He added that “clarity and transparency from government is vital to build trust with business and drive recovery.”
While temporary vacancies remain resilient in the private sector and some industries like construction, logistics, engineering and healthcare are still adding roles, both KPMG and REC warn that broader confidence is needed before hiring picks up again.
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