Permanent placements and temporary billings rise at slower rates. Job vacancies increase at fastest pace for 20 months. Availability of permanent staff declines; temp availability unchanged and pay growth quickens but remains subdued overall.

The Recruitment and Employment Confederation (REC) and KPMG Report on Jobs – published today – provides the most comprehensive guide to the UK labour market, drawing on original survey data provided by recruitment consultancies. Slower rises in permanent and temporary appointments. Although there were further increases in permanent and temporary staff appointments during December, in both cases the rates of growth eased since November.

Demand for staff continued to rise in December. The rate of expansion of overall job vacancies quickened to the fastest in 20 months. Data signalled increased vacancies from both private and public sector employers. The availability of permanent staff declined in December for the first time since April, albeit modestly. Temporary/contract staff availability was meanwhile unchanged, ending a 56-month sequence of growth. Rates of inflation of permanent salaries and temp wages quickened to 15- and nine-month highs respectively in December, although remained modest overall.

Data for the English regions showed that growth of permanent placements remained strongest in the North during December. The Midlands also saw a marked rise, while growth in the South was solid. In contrast, London registered a sharp drop in placements. Growth of temp billings was broad-based across the English regions in the latest survey period, with the South posting the fastest rise. The weakest increase was signalled in London. Recruitment consultants indicated that private sector demand for staff continued to rise in December, although for both permanent and temporary workers growth was slower than in November. Demand was also higher in the public sector, with solid increases in vacancies signalled for both permanent and temporary staff.

Growth of demand was signalled for all eight categories of permanent staff monitored by the survey in December. The strongest increase was again recorded for Engineering/Construction workers. Nursing/Medical/Care remained the most in-demand category of temporary staff in December, with growth holding steady on November’s strong pace. Higher vacancy levels were also recorded for all other monitored groups with the exception of Executive/Professional, where a marginal reduction was signalled. Bernard Brown, Partner and Head of Business Services at KPMG, comments: “It’s concerning to see the pace of recruitment slowing. Job placements may still be moving in the right direction but questions must now be asked about whether the declining rate of growth is indicative of a longer-term problem. It seems that the time lag many economists spoke about towards the end of last year is shrinking, as employers delay decisions until they have more certainty about the economy. Individuals are also showing signs that they’d rather stick with what they know, as the numbers making themselves available for permanent roles has dropped for the first time since April 2012.

“However, with some areas of the country outperforming others and the private sector seeing more job placements in December the hope must be that employers will handle this latest setback. They certainly reacted positively to news that a fiscal cliff was avoided in the US and, if this is anything to go by, we should see the trend for rising employment continue. It may be slower than in the last few months of 2012, but growth should still be welcomed.” Recruitment and Employment Confederation chief executive Kevin Green says: “We’ve now had three months of uninterrupted growth in people finding permanent jobs through recruitment agencies and five consecutive months of growth in temporary job placements. It’s another milestone for the UK labour market, which hasn’t seen a full quarter of simultaneous increases in both temp and permanent job placements since mid-2011. It’s also further confirmation of the continued strength of our flexible labour market in keeping people in employment.

“The picture for 2013 is likely to be similar to 2012, and we expect the labour market to yet again outperform the sluggish economic growth in the UK. Employers are confident in their own businesses if not the economy as a whole and know they have to retain or recruit talent in order to have a competitive advantage. “In fact, the developing story this year is likely to be one of skills shortages as people with expertise in key areas become harder and harder to source. We are already seeing this in areas like IT and engineering and recruiters are telling us that candidates are in short supply to fill jobs for drivers, chefs and carers.” Full reports and historical data from the Report on Jobs are available by subscription. Please contact economics@markit.com