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UK recruiters registered a sharp rise in the number of people looking for work last month, according to a survey published on Wednesday, as companies being squeezed by higher interest rates and slowing demand cut their headcount.
The availability of potential staff has been improving for eight months, following a long period in which businesses struggled to hire. But the rate of increase picked up in October, trade body the Recruitment & Employment Confederation and advisory firm KPMG said.
Its seasonally adjusted index measuring the overall availability of permanent and temporary staff rose from to 59.0, from 55.5 in September. Any figure higher than 50 indicates improvement.
Many recruiters attributed the increase to companies making staff redundant or restructuring their workforce, with some people also looking for a new job because they were worried they would be laid off.
Claire Warnes, partner at KPMG UK, said the widening pool of candidates was “good news for recruiters” but reflected “employers who are making more redundancies as they tighten budgets”.
The monthly report, which showed recruiters placing fewer permanent staff and only a marginal rise in temporary billings, will be closely watched by Bank of England policymakers in the absence of official data on the state of the jobs market, the publication of which is on hold at present.
The BoE said last week that it thought unemployment was running slightly higher than its August forecast, but that wages were still rising at a pace that would fuel persistent inflation. This could mean it would need to keep interest rates higher, at the cost of more jobs, to bring inflation sustainably to target.
Jonathan Haskel, a member of the central bank’s Monetary Policy Committee, said on Friday that workers’ bargaining power on wages could have increased. This was in spite of the weak economic backdrop because “labour ‘mismatch’ had worsened”, with people available to work lacking the skills needed to fill open posts.
The REC/KPMG survey painted a similar picture of a labour market in which certain employers were still struggling to hire — and having to raise wages sharply to fill vacancies — despite rising unemployment.
It found that pay growth for people starting permanent roles was the weakest in two-and-a-half years but still in line with the long-term average. Many recruiters reported that employers had been forced to raise offers in order to secure staff with the right skills and to reflect higher living costs.
REC chief executive Neil Carberry said that while wage growth was now “within normal parameters”, it remained strong with a sharp split between sectors including construction and IT, which have been shedding jobs, and those such as hospitality and healthcare still affected by shortages.
The number of vacancies for nursing, medical and care roles was still growing rapidly, the survey showed, as healthcare providers increased hiring ahead of the more difficult winter months.
Although NHS trusts have been trying to reduce their reliance on expensive agency staff to fill gaps, the REC said they were still playing a crucial role. NHS demand for temporary workers was still running at as much as 70 per cent higher than pre-pandemic levels, it said.