Source: Sharecast
The Report on Jobs, published jointly by KPMG and the Recruitment & Employment Confederation (REC), said that its index for the supply of labour rose to 66.1 last month from 63.3 in May, reaching a high not seen since November 2020.
The increase came amid reports from recruiters of redundancies and reduced appetite for staff, while improved labour supply, tighter budgets and lower demand for workers hit pay growth, limiting growth in starting salaries and temp wages over the month.
The results were published on the same day that Bank of England governor Andrew Bailey signalled larger cuts to interest rates could be on the cards, as the labour market loosens.
Speaking in an interview with The Times, Andrew Bailey said there had been "consistent" evidence that firms had been "adjusting employment" following April’s hike to employers’ National Insurance contributions. This, he argued, would help bring down inflation, paving the way for further interest rate cuts.
The KPMG-REC report, which compiled responses from 400 UK recruiters and employment consultancies, found that permanent staff appointments "fell at a substantial pace" that was the quickest in 22 months, while temp billings declined at their steepest rate in four months.
Companies were cited as pulling back on hiring due to a reduced confidence around the outlook and worries over costs.
“Ongoing geopolitical turbulence and the threat of rising costs, alongside the promise of technology efficiencies, mean companies continue to wait and see with their hiring," said Jon Holt, group chief executive and UK senior partner at KPMG.
Also commenting on the survey, the REC's chief executive Neil Carberry said: "Much of that hesitation stems from the scar tissue left by the Spring tax hikes and fear of further business tax rises.
"But underlying this, there are some signs of improving demand. Temporary vacancies, especially in the private sector, are resilient. And we are seeing more sectors adding vacancies in construction, logistics, engineering and healthcare. There is potential out there – if businesses are given a clear run at doing what they do best."