Summary

Hiring activity across the UK remained subdued in May, according to the latest KPMG and REC, UK Report on Jobs survey, compiled by S&P Global. Recruitment consultants indicated that caution around the outlook and delayed decision-making led to a further marked fall in permanent staff appointments, while temp billings rose only slightly. At the same time, vacancies expanded at the second-softest rate since early 2021.

The higher cost of living and shortages of skilled candidates meanwhile drove sustained increases in starting pay for both permanent and temporary staff. However, rates of pay growth softened since April amid a further improvement in overall candidate numbers. Aggregate staff supply expanded at the quickest rate since December 2020, which was often attributed to redundancies.

The report is compiled by S&P Global from responses to questionnaires sent to a panel of around 400 UK recruitment and employment consultancies.

Economic uncertainty continues to dampen hiring activity

Lingering uncertainty around the economic outlook and delayed decision-making continued to weigh on staff placements midway through the second quarter. Permanent staff appointments fell for the eighth month in a row and at the quickest rate since January 2021. Temp billings meanwhile expanded at the softest pace since last October and only slightly.

Total candidate supply expands at steepest pace since December 2020

The overall availability of labour improved for the third month running in May. Furthermore, the rate of expansion was the sharpest seen for nearly two-and-a-half years, with recruiters often linking the upturn to redundancies and a slowdown in hiring activity. Permanent candidate availability increased at a sharper rate than that seen for temporary staff. The former rose at the quickest rate for 29 months, while the latter recorded the strongest upturn since February 2021.

Rates of starting pay rise at softer, but still strong rates

The higher cost of living and efforts to attract skilled staff continued to place upward pressure on starting pay during May. Salaries for newly-placed permanent staff rose at a historically sharp pace overall, albeit one that was the softest seen for just over two years. Temp pay growth also edged down since April, and was the second-slowest since April 2021.

Vacancies increase at slowest rate in 2023 to date

Growth of demand for staff slowed for the third straight month in May, with overall vacancies expanding at the softest pace since last December. Furthermore, the upturn was the second-weakest recorded since February 2021. Permanent vacancies increased at a faster pace than that seen for temporary roles, but rates of growth were nevertheless the slowest seen for five and 33 months respectively.