Sharp rise in permanent staff placements

The latest KPMG and REC, UK Report on Jobs: London pointed to a stronger start to the second half of the year, as momentum in temporary billings was reinforced by a renewed and robust upturn in permanent placements. This firmer hiring backdrop contributed to staff availability rising at notably slower rates. Meanwhile, further increases in vacancies were signalled.

Meanwhile, pay pressures intensified. London recorded rapid increases in both starting salaries for permanent joiners and wages for temporary staff, with the respective rates of inflation reaching 16- and 11-month highs. Notably, the capital also posted the strongest pay growth of the four monitored English regions.

The KPMG and REC, UK Report on Jobs: London is compiled by S&P Global from responses to questionnaires sent to around 100 recruitment and employment consultancies in London.

Commenting on the latest survey results, Anna Purchas, Vice Chair & London Senior Partner at KPMG UK, said: “The headline for recruitment as we head through the summer is businesses are back hiring. While the geopolitical picture remains uncertain, things are settled enough for businesses to start taking a pragmatic approach to their hiring plans. London’s leading the charge, principally because of very concentrated demand in high growth sectors. Financial services firms are committing to capital investments here, and there’s genuine momentum in the tech ecosystem, particularly around AI infrastructure roles.

“However, being as sector-driven as it is, this growth is not being seen across the board. Candidate availability is still increasing, but at a much slower rate than earlier in the year. London has a deeper pool of people looking for work yet businesses are still struggling to fill roles in areas such as construction, hospitality, care and specialist professional services. So, the priority now must be to turn this improvement into sustained growth across every area of London’s economy.”

Fresh rise in permanent placements

Permanent placements across London returned to growth in July, rising for the first time in three months. The upturn was robust and the strongest recorded for almost four years, with recruiters linking the latest increase to demand for skilled staff and stronger hiring activity for certain roles.

Among the other monitored English regions, only the Midlands recorded an increase in permanent placements, though there growth was only marginal. Permanent placements continued to fall in the North and South of England, while permanent staff placements across the UK as a whole stabilised.

Temporary billings across London rose for a third successive month in July, with the seasonally adjusted index climbing for the fourth month running to reach a 33-month high. Recruiters attributed the latest upturn to stronger activity levels, while the FIFA World Cup was also cited as a factor.

Of the four monitored English regions, only the North of England recorded a stronger uptick in temp billings than seen in London. Meanwhile, the Midlands recorded a fresh decline.

Once again, London was the only monitored English region of the four to register a rise in permanent vacancies in July. Growth has now been reported on a monthly basis since April, with the latest uptick solid and the most pronounced since October 2022.

Demand for temporary workers also rose, with the third straight monthly rise in temp vacancies sharp and the fastest in three-and-a-half years.

Growth in permanent candidate availability recedes

Though permanent staff supply continued to rise solidly across the capital in July, the pace of growth receded further to the weakest in nearly two-and-a-half years. In fact, of the four monitored English regions, London recorded the softest uptick.
Where permanent staff supply rose, London recruiters linked this to redundancies.

The number of candidates available for temporary roles increased sharply but at a moderated pace across London in July. The upturn, having weakened for a second month running, was the least pronounced since September 2023. In some cases, recruiters linked high candidate availability to a larger pool of senior employees.

All four tracked English regions saw temp staff availability rise at softer rates during July.

Starting salary inflation picks up notably in July

July marked a rapid rise in salaries awarded to new permanent joiners across London. The pace of increase was the fastest in 16 months, having gathered momentum for a fourth month running. Higher salaries were linked by panellists to the hiring of senior staff and continued efforts to attract candidates with the right skillsets.

In fact, the rate of starting salary inflation across London noticeably outpaced the other three tracked English regions.
Hourly wages for short-term workers rose across the capital for a fourth successive month in July. The respective seasonally adjusted index ticked up further from a sub-50.0 reading in March to an 11-month high and was indicative of a rapid increase. According to anecdotal evidence, contracts awarded for senior positions had pushed up rates.

All four English regions saw temp wage inflation quicken in July, with London leading for a second month running.

Maxine Bligh, Recruitment and Employment Confederation’s Chief Membership & Innovation Officer, said: “Rays of light are beginning to break through for the job market in bellwether London as employers revive hiring plans. Recruiters’ revenue from supplying temporary workers has risen for a third successive month in London. And the growth in permanent placements in London was the fastest for nearly four years. This reflects the overall national trend where, remarkably, this is the first month without a decline in permanent placements in the UK since Liz Truss resigned as Prime Minister in 2022, underlining just how prolonged the downturn in permanent hiring has been nationwide.

“That makes it all the more important that the government takes decisions now that builds business confidence and momentum in hiring. This means action to bring the Industrial Strategy to life and exercising pragmatism around the implementation of the Employment Rights Act, particularly guaranteed hours proposals. The Autumn Budget is a great opportunity to give businesses the shot of confidence they need to hire and invest.

“If the government is serious about getting more young people their first vital opportunities of work they must think carefully about the balance of their Make Work Pay Agenda by easing mounting costs and red tape around employment.”