August 2024 UK Labour Market Report: Employer optimism and economy slowly growing

Discover the latest developments in the UK labour market through the KPMG and REC, UK Report on Jobs, featuring exclusive data insights from recruitment consultancies, such as Redline Group. This comprehensive report leverages original survey data, providing a monthly overview of labour market dynamics. Here are the key highlights from July’s findings.

Key Findings from the July Report:

• Staff appointments continued to drop at slower rate.
• Salary growth remained sustained.
• Vacancies saw a slight decrease.

Overview

The July 2024 report indicates a slowdown in the decline of staff appointments, with the rate of decrease easing compared to previous months. This trend suggests that while the market is still under pressure, the severity of the contraction is diminishing, potentially signaling a stabilisation. However, employer confidence remains uncertain, with businesses hesitant to make significant hiring decisions amid ongoing economic challenges.

Employer Confidence still Shaky:

In July, the decline in permanent staff appointments persisted, although at a reduced pace. This drop was linked to a decrease in vacancies and weaker demand for staff. Contract and temporary billings also experienced a decline, albeit minimal. Additionally, some companies opted not to replace workers whose contracts had ended.

Conversely, candidate availability continued to rise, marking an ongoing trend of increased supply. Both permanent and contract staff availability saw sharp increases, though the rate of growth was slower than in June. Recruitment consultants attribute the rise in candidate availability to a mix of redundancies, slow decision-making among clients, and fewer job openings.

Speaking about this, Jon Holt, Chief Executive and Senior Partner of KPMG in the UK, said: “Despite the stability of a new Government and easing inflationary pressures, employer confidence to recruit has not yet returned, leading to delays with permanent hiring and even a small contraction in the contract/temporary market as worker contracts are not renewed. In the sectors where employers are still hiring, a lack of skilled talent continues to drive pay growth.”

Engineering Sector Continues to Growth:

Not all sectors are facing the same level of contraction. The engineering sector, in particular, has shown resilience. July’s survey revealed that half of the ten broad sectors tracked experienced a drop in permanent staff demand, with Engineering ranking as the second strongest performer in both permanent and temp/contract vacancies. This underscores the ongoing demand for skilled workers in technical engineering fields, despite broader market uncertainties.

Skill shortages in specialised areas such as Electrical, Mechanical, and Design Engineering continue to drive this demand. Additionally, there is significant demand for expertise in Electronics Design, Software Development, Front End, Full-stack, AI, JAVA, IT Support, and Data Specialisations. The persistent need for talent in these fields highlights their critical role in the UK’s electronics and high-tech infrastructure development.

Starting Salaries Continued to Rise:

A notable trend in the July report is the continued rise in starting salaries for permanent positions. Although the rate of increase has slowed since June, upward pressure on wages persists, primarily driven by a shortage of qualified candidates. Employers are increasingly willing to offer higher pay to attract the talent they need, particularly in high-demand sectors such as engineering and technology.

Similarly, pay rates for contract and temporary positions have also increased, though the growth is marginal and represents the weakest in over three years. This moderation in wage inflation is likely due to the increased availability of temporary workers, which has helped to alleviate upward pressure on pay rates. Nevertheless, the overall trend indicates that staff shortages and recent wage hikes are continuing to drive up pay across the board.

Future Outlook:

Summing up the latest survey results, Jon Holt, Chief Executive and Senior Partner of KPMG in the UK, said:

“With forecasts for economic growth improving and potential further interest rate cuts over the coming months there are green shoots of economic recovery. But it’s still early days for this new Government and businesses may be cautious to hit go on their full recruitment and investment strategies until they have heard more from the Chancellor in her Autumn Budget.”

Redline Group changes lives every day, building world-class teams for technology companies. We continue to be one of the UK’s most trusted Electronics and High Technology recruitment specialists for professional Contract, Permanent, and Executive positions. With four decades of experience our enthusiastic, knowledge-led people create trusted recruitment solutions. Redline is perfectly positioned to offer advice about future-proofing your permanent, contract and interim needs in the technology sector.  

For more information about this month's report, contact David Collins on DCollins@RedlineGroup.com or call him at 01582 878804.