The latest KPMG and REC, UK Report on Jobs: North of England survey revealed divergent hiring trends in June, as a fall in permanent staff appointments contrasted with a rise in temp billings. While there was a sharper reduction in permanent job openings, growth in temp vacancies slowed.

There was an improvement in pay trends as the rate of permanent salary inflation rose to its highest since January. Temp pay meanwhile rose for the first time in four months.

Fresh reduction in permanent placements in June

For the first time in five months, there was a drop in permanent staff appointments across the North of England in June. Fewer vacancies and slower decision-making, linked in turn to heightened uncertainty around the Middle East war and the wider economic climate, were reportedly behind the latest fall. Some recruiters indicated that there was a preference among firms for temp staff. The rate of reduction was only modest, however, and broadly in line with the UK trend.

June survey data marked a second successive month of growth in billings received from the employment of temporary staff across the North of England. In anecdotal evidence, recruiters noted greater demand for short-term staff due to projects being signed off, with some reporting a greater preference for contract work amid ongoing market uncertainty. Although the upturn was the strongest in two years and solid, the pace of expansion was the softest of the four monitored English regions.

For the second time in as many months, recruiters in the North of England signalled a fall in permanent job vacancies in June. Although solid and the strongest recorded since the start of the year, the rate of reduction was slower than the UK-wide trend. In contrast, the trend of growth in temp vacancies was stretched to five months in June. The pace of expansion slowed to its weakest since February and was only slight overall, but compared favourably with a marginal reduction at the national level.

Further rapid increase in permanent labour supply in June

As has been the case on a monthly basis for two-and-a-half years, the supply of permanent staff across the North of England increased in June. Panellists noted that redundancies and challenging market conditions had led to a rise in staff availability. Despite slowing from May, the rate of expansion was still substantial in nature and the sharpest of all four monitored English areas for the third month running.

Recruiters in the North of England signalled an uplift in the availability of temporary staff in June, thereby stretching the current trend of growth to 40 months. Survey respondents often linked the increase to redundancies, partly as a result of company closures and restructuring efforts. The respective seasonally adjusted index fell more than five points over the month but nonetheless signalled a steep rise in temp labour supply that was broadly in line with the UK-wide trend.

Starting salary inflation hits five-month high in June

June data indicated a further rise in average starting salaries awarded to new permanent joiners across the North of England. This marked the seventh increase in as many months, with the rate of pay growth the most pronounced since January. According to anecdotal evidence, some firms offered higher salaries to attract suitably-skilled or more senior staff. There were also reports that a number of employers had raised pay to reflect the higher cost of living. Of the four monitored English regions, only London signalled stronger starting salary inflation than the North, but only slightly.

June survey data signalled a fresh increase in temp pay rates across the North of England, thereby ending a three-month period of reduction. The rate of wage inflation was the most pronounced in just over a year and solid. There were reports of firms offering higher pay to attract suitable candidates. The local rise in temp pay was slightly stronger than that seen at the UK level, despite the latter also seeing a steeper rate of growth in June.

The North’s labour market is continuing to adapt to an uncertain economic environment. While permanent hiring has softened as employers adopt a more cautious approach to recruitment, businesses are balancing immediate pressures with their longer-term workforce needs.

That said, the picture isn't without its bright spots. Demand for temporary staff has grown at the strongest rate in two years, giving businesses the flexibility to respond to new opportunities and changing workloads. Pay trends have also strengthened, with starting salaries rising at their fastest pace since January as employers continue to compete for the skills they need.

The good news is that Northern businesses are continuing to invest where it matters most. They're continuing to invest in the skills they need, with stronger starting salary growth reflecting ongoing competition for experienced talent.

Neil Carberry

After a long recruitment winter, these figures show truly hopeful signs. Temporary and contract work once again leads the way, with a second successive month of growth in billings in the North of England. Firms are reacting to demand without yet feeling confident enough to commit to larger scale permanent hiring. Notably, permanent placements in the North of England fell for the first time in five months in June, albeit only slightly. Nevertheless, pay trends are improving. With a new Prime Minister coming, there is a clear message here from business. The potential for the growth the country needs is here – but not if the Government pours more uncertainty and cost onto the private sector. It is time to back business and work in partnership, not hand down costs and regulation from on high. That’s what contributed to unworkable proposals on guaranteed hours and a National Insurance bill that has driven youth unemployment up. It is time to change that.