The latest KPMG and REC UK Report on Jobs survey, compiled by S&P Global, saw the number of permanent staff placements fall for the eighth consecutive month across the Midlands at the start of 2025.
The decrease was marked and softened only slightly from that seen in December. Temp billings meanwhile, rose only fractionally as the rate of increase eased to the softest in the current ten-month sequence.
Demand for staff was contracted, as vacancies for both permanent and temporary roles reduced during January, with the latter seeing the steepest fall since May 2020.
On the pay front, permanent salary inflation gained momentum for the second month in a row and was at a four-month high. Similarly, temp pay rates rose at the quickest pace since last October.
The KPMG and REC, UK Report on Jobs: Midlands is compiled by S&P Global from responses to questionnaires sent to around 100 recruitment and employment consultancies in the Midlands.
Eighth consecutive decrease in permanent staff appointments
The number of staff placed into permanent roles fell across the Midlands in January, extending the current sequence to eight months. Recruiters linked the sustained reduction to a lack of demand from clients as well as reports of recruitment freezes in response to upcoming changes in employment law.
All four monitored English regions saw permanent placements fall in January, with the Midlands seeing the second-softest decline, after London.
January data saw the number of billings received for temporary staff employment broadly stall across the Midlands. The seasonally adjusted Temporary Billings Index was only just above the neutral 50.0 threshold, as recruiters mentioned a lack of jobs coming through agencies. Although fractional, the Midlands was the only region to post a rise in temporary billings.
Latest data pointed to an eighth consecutive monthly decrease in demand for permanent staff in the Midlands. The pace of reduction eased slightly but remained robust overall. Of the four monitored regions, only London saw a softer fall in vacancies than the Midlands.
Temp vacancies fell for the fifth month in a row in January. The decrease was sharp and the most severe since May 2020. Nevertheless, the downturn was the softest of the four monitored English regions.
Permanent staff availability rises at softer yet still marked rate
Adjusted for seasonal factors, the Permanent Staff Availability Index signalled a twenty-second consecutive monthly increase in permanent candidate numbers in January. There were reports that the uplift in staff supply was linked to a rise in redundancies. The rate of increase was marked but the least prominent in three months. The rise in the Midlands was the strongest of the four monitored regions.
Temp staff availability across the Midlands picked up again at the start of 2025, extending the current sequence to 21 months. Recruiters mentioned a lack of temporary contracts being available which pushed candidate numbers higher. The rate of growth in temp staff supply slowed from December and was the softest since last August.
Starting salary inflation gains momentum in January
Recruiters across the Midlands continued to record an increase in starting salaries for permanent workers in January, thereby stretching the current sequence of uplifts which began in March 2021. Some panellists mentioned that the rise was due to higher salary offers to attract suitably skilled staff. The rate of starting salary inflation strengthened from the previous survey period to reach the highest since last September.
The Midlands recorded the strongest salary growth of the four monitored English regions.
Average hourly pay for short-term staff rose for the second time in as many months at the start of the year. Where temp wages increased, anecdotal evidence suggested the rise was due to a shortage of skilled staff. The rate of increase was solid, and the steepest for three months.
Kate Holt, People Consulting Partner at KPMG in the Midlands, said: “Businesses in the Midlands are maintaining a highly cautious approach when it comes to making permanent hires, and the eight-month trend of declining appointments is likely to be extended until the new tax year at least.
“Growth of temporary billings in the region have also stalled, in a clear sign that the impending employers National Insurance rate rise alongside ongoing economic pressures are weighing heavy on employers’ confidence.
“Wage increases also continue to dominate the local market, with starting salaries for both permanent and temporary staff in the Midlands now escalating above the national average. As employers are forced to offer higher starting salaries to attract and retain talent, this will only serve to exacerbate wage inflation further. All this points to the Midlands job market remaining challenging throughout 2025.”
Neil Carberry, REC Chief Executive, said: “Businesses entered the year uncertain on the growth path, and that has driven a ‘wait and see’ approach to hiring. Around the country, REC members report that clients have plans and are hopeful for the year ahead – but firms are slowing investment until they see more momentum in the economy.
“This explains why temporary staff employment broadly stalled across the Midlands, although the Midlands and London had softer declines in permanent hiring than elsewhere in England, however.
“Last week’s move on interest rates was timely as a way of boosting confidence. The more central role of growth in Government thinking since the Chancellor’s speech last month will also help. But it takes time, and real action, to build business confidence.
“An autumn of fiscal gloom, difficulty navigating significant upcoming tax rises and little progress on the practicalities of a costly new approach to employment rights are all acting as brakes on progress. As well as the monetary stimulus to growth, it’s time for greater clarity on how the Government will use its industrial strategy to drive the growth of the whole economy.”
