The latest KPMG and REC UK Report on Jobs survey, compiled by S&P Global, signalled the sharpest fall in permanent placements since August 2023 in the final month of 2024. Temp billings continued to increase, albeit at a softer rate than that seen in November.
Demand for permanent staff continued to fall in December, with the rate of decrease the most pronounced in four-and-a-half years.
Concurrently, recruiters suggested that redundancies had contributed to additional candidates being available to work, as indicated by sustained increases in both permanent and temporary staff supply.
On the pay front, permanent salary inflation remained modest, and well below the series average. Temp pay meanwhile rose for the second time in three months.
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.
Sharpest fall in permanent placements for 16 months
December data signalled a further decline in the number of permanent placements made by recruitment agencies in the Midlands. Staff appointments were reportedly curtailed by hesitancy among firms to hire amid weak business confidence and economic uncertainty. The pace of contraction was marked and the most pronounced since August 2023.
At the UK level, the Midlands saw the second-softest drop in permanent placements, behind London.
Temp billings across the Midlands saw growth for the ninth consecutive month at the end of 2024. The rise in temporary staff placements contrasted with the UK average which signalled a solid decrease. Panellists noted that the expansion was sometimes due to new client wins. That said, the rate of increase in the Midlands was the softest seen for three months, and modest overall.
Permanent vacancies in the Midlands decreased for the seventh successive month during December. Of the four monitored English regions, the Midlands saw the second-sharpest reduction in demand for permanent staff, with the overall decline the most marked since June 2020.
With regards to temporary vacancies, the Midlands posted a fourth consecutive decrease in December. That said, the reduction in the Midlands was the softest of the four monitored regions.
Stronger rise in permanent staff availability
The supply of permanent staff rose again in December, thereby extending the current sequence of increasing candidate numbers to 21 months. Moreover, the pace of growth accelerated from November and was the steepest in 2024. Of the four monitored regions, the Midlands saw the strongest rise. Anecdotal evidence suggested that redundancies in the market had boosted the supply of candidates.
Temporary candidate availability in the Midlands increased for the twentieth consecutive month during December. The rate of growth in temp candidate supply eased from November to reach a three-month low. Panellists stated that new candidates had become available in the temporary staff market. The pace of the upturn was the second-strongest of the four monitored English regions, behind the North of England.
Permanent salaries rise moderately
Permanent starting salaries in the Midlands increased again in December, thereby extending the current sequence of inflation that began in March 2021. The rate of salary inflation quickened slightly from the previous survey period, though remained below the average seen over 2024. The rise in salaries for new permanent joiners was linked to shortages of suitably skilled candidates. The pace of salary inflation was weaker than the UK average.
Midlands recruitment firms registered an increase in temp pay rates for the second time in three months in December. The pace of wage inflation was only modest, however. Where temp hourly pay rose, recruiters pointed to the need to hire skilled staff, though this was partly offset by higher candidate availability.
Kate Holt, People Consulting Partner at KPMG in the Midlands, said: “While the Midlands saw the second-softest fall in permanent placements in the UK during December, the region’s businesses are still holding back on recruitment against an uncertain backdrop.
“A drop in permanent vacancies – the most marked since June 2020 – shows firms are worried about the economic outlook, despite signs of more stable conditions in 2025.
“If uncertainty prevails, Midlands firms must consider longer-term solutions to secure the skills they need to grow – whether this means investing more heavily in learning and development for existing staff or adapting their hiring strategies to attract the right candidates.”
Neil Carberry, REC Chief Executive, said: “This report emphasises a weak mood in some businesses as they built their budgets for this year, and made changes designed to save on costs after a tough Budget. That said, sentiment can change quickly. Temp billings across the Midlands saw growth for the ninth consecutive month at the end of 2024.
“December is always a hiring low point, and a new year brings new hope – with inflation under control, low unemployment and economic growth expected, the fundamentals are better than many appreciate. It is what happens now, as firms return to the market in January, that will decide the path ahead.
“Recruitment is one to watch in early 2025 because it is one of the earliest indicators of a broader economic recovery, with any sign of a turn hugely significant with the sector contributing a massive £44.4bn to the UK economy in 2023.”
