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UK recruitment frenzy slows in September as economy struggles

recruitment  LONDON, UNITED KINGDOM - 2022/09/30: A man walks in the city of London, the capital's financial district, as UK economy is shaken by the Chancellor and Prime Minister's mini-budget. (Photo by Dominika Zarzycka/SOPA Images/LightRocket via Getty Images)
UK recruitment slowed in September as the economic outlook weakens. Photo: Dominika Zarzycka/SOPA Images/LightRocket via Getty (SOPA Images via Getty Images)

The UK labour market lost steam as growth in demand for permanent and temporary staff weakened in September, according to a survey from KPMG and the Recruitment & Employers Confederation (REC).

Businesses are being more cautions when it comes to hiring amid a weaker economic outlook which has also discouraged workers from changing jobs.

“Some employers, even those who anticipate that the recession may be short, are taking steps now to contain costs, including hiring freezes,” Claire Warnes, head of education, skills and productivity at KPMG UK, said.

Read more: UK households lose £2 in 'stealthy' freezes for every £1 in tax cuts

Overall vacancy growth softened for the sixth month in a row in September, to mark the slowest rise in demand for staff since February 2021.

This was partly because agencies are still struggling to find candidates, against a backdrop of labour shortages.

London saw the biggest rise in permanent staff appointments, while the south of England saw the first reduction in 19 months.

A generally low unemployment rate, skills shortages and Brexit also weighed on candidate availability, the survey showed.

With unemployment at record lows, pay continues to rise for both temporary and permanent workers starting new jobs, and activity levels across the recruitment and staffing industry remain high. While any economic slowdown this winter will affect the market, the extent of shortages mean that hiring will remain a focus for employers,” Neil Carberry, chief executive of the REC, said.

Read more: FTSE 100: Wetherspoon narrows losses to £30m as sales recover

Growth of demand for permanent staff softened across nine of the 10 monitored job categories in September, with retail the sole exception. The strongest increase in permanent vacancies was signalled for nursing/medical/care, while the weakest was seen for construction.

Secretarial/clerical saw the quickest rise in temporary vacancies during September, and was one of the two categories which did not register slower growth compared to August. Executive/professional meanwhile saw the slowest increase in temp staff demand.

Watch: What is a recession and how do we spot one?