September insights into the UK job market

by Andrew Childerley

September insights into the UK job market

Permanent staff appointments fall at softer pace in September

  • The UK job market showed signs of easing in September, with permanent placements falling at the weakest rate in three months.
  • Temp billings also increased, albeit modestly, marking the first rise in three months.
  • Pay pressures continued to weaken, with rates of starting salary inflation and temp wage growth edging down to 30- and 31-month lows respectively.
  • The overall availability of candidates improved again in September, with both permanent and temporary labour supply increasing at historically strong rates.
  • Total vacancies slipped into contraction territory in September, marking the first fall in overall demand for staff since February 2021.

Key takeaways

  • The UK job market is starting to cool, but it remains relatively strong.
  • Employers are still cautious about hiring permanent staff, but demand for temporary workers is holding up.
  • Pay growth is slowing, but it is still positive.
  • The availability of candidates is improving, but there are still skill shortages in some sectors.

What does this mean for jobseekers?

The job market is still favourable for jobseekers, but it is becoming more competitive. Employers are more likely to hire for temporary roles than permanent ones, so it is important to be flexible. If you are looking for a permanent role, be sure to highlight your skills and experience in your CV and cover letter.

It is also important to note that pay growth is slowing. If you are negotiating a new salary, be realistic about your expectations. However, if you have the skills and experience that employers are looking for, you should still be able to negotiate a good salary.

This information was taken from the latest KPMG and REC, UK Report on Jobs survey, compiled by S&P Global. 

Neil Carberry, REC Chief Executive, said:

“Employers tell us they are feeling better about themselves as the year moves on, and today’s data does suggest the possibility of a turnaround in hiring over the next few months. Permanent placements have been falling for a year now from abnormal post-pandemic highs. While permanent hiring activity continues to slow, fewer firms reported a slowdown last month, leading to a much shallower rate of decline than most months recently. Likewise, temporary hiring remains robust with billings growing marginally in September – as they have most months this year.

“This feels like a market that is finding the bottom of a year-long slowdown. And the relative buoyancy of the private sector is likely to be driving this more positive outlook – while vacancies are now dropping they remain robust in the private sector by comparison to the public. Some sectors such as hospitality, engineering, logistics and healthcare continue to experience very strong and growing demand. Along with high inflation, this is likely to be contributing to the growth of pay for temps and perms alike.

“As we move towards the Autumn Statement, action to help people find high quality roles is essential as the picture varies so widely from sector to sector. The REC would like to see a focus on skills, finally reforming the system to deliver a mix of high-quality courses within the levy framework, and action to tackle inactivity – like extending the Restart programme which has helped recruiters place thousands of long-term unemployed people into work. Both of these could form part of a long-overdue people and growth strategy. From reforming government procurement to better and more effective regulation, there is a lot government could do in partnership with recruiters to drive growth and prosperity.”

Claire Warnes, Partner, Skills and Productivity at KPMG UK, said:

“A concerning feature of this month’s data is that demand for staff is losing momentum, with total vacancies falling for the first time since February 2021 amid a fresh reduction in permanent vacancies. While both reductions are slight, employers are clearly nervous due to the long-term economic uncertainty and budget constraints that are impacting businesses everywhere. This in turn is leading to a continued reliance on temporary staff.

“For several months, strong pay growth has been a consequence of a tight labour market. But strains on employers’ budgets are now affecting the rate of starting salary inflation which is at a two-and-a-half-year low, while temporary wages increased at the slowest rate in 31 months.

“Skill shortages across a range of sectors – from permanent IT staff to temporary nursing roles – also continue to be an area of long-term concern for the economy.

“The labour market is starting to look slightly precarious again and recruiters will be wondering and hoping that the recent slight calming of inflation rates positively impacts the outlook for both employers and jobseekers.” 


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