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Decline in staff placements in November is sharpest for 17 months, according to REC/KPMG

Permanent staff placements decreased for the second month running in November according to the Recruitment and Employment Confederation (REC) and KPMG Report on Jobs, published today.

Although moderate, the rate of decline quickened to the sharpest since July 2009. Contributing to the reduction in placements was an easing in the rate of growth of permanent job vacancies to a 25-month low.

Agencies' billings from the employment of temporary/contract staff rose for a twenty-eighth consecutive month in November. However, the rate of growth was only slight and weaker than in October.

Pay pressures remained subdued in November, with both permanent salaries and temporary/contract staff hourly rates increasing only marginally. In the case of the latter, the rate of inflation was at a 10-month low.

The availability of staff to fill job vacancies continued to rise in November, but at a slower pace. Growth of permanent candidate availability was only marginal and the weakest since May, while the rate of increase in temp availability was at a three-month low.

Kevin Green (pictured), chief executive of the REC, said: "This month's Report on Jobs from the REC and KPMG highlights a rapidly declining jobs market. The market has been slowing since May but this slowdown has accelerated in the autumn. This is being driven by the double whammy of falling business and consumer confidence.

"This is bad news for those out of work and, as a consequence, we expect unemployment to rise in December and January. On a positive note, however, the report shows that temporary staff appointments are still growing, albeit at a decreasing rate.

"The Government has done as much as it can in the short term to remove restrictions to employment and stimulate demand. However, if confidence doesn't return quickly to get the jobs market moving again, the Government may need to take more radical action in the New Year."

Bernard Brown, partner and head of business services at KPMG, added: "This month's Report on Jobs makes grim reading. Given the uncertainties of the European market, the Government's recent stimulus package could not have come sooner, as unemployment creeps ever higher. Whilst most commentators suggest unemployment will peak lower than 3 million, this figure may be tested in the year ahead.

"Time will tell if recent interventions are enough to reverse the worrying trend of the last few months. If so, we should pick this up in our statistics over the next few months.

"Bright spots in an otherwise gloomy data set were that the agencies surveyed reported rising demand in permanent placements for engineering and construction staff ahead of this time last year, and demand also rose for IT and computing staff, together with the executive / professional and secretarial / clerical categories. But these isolated sectors do not compensate for an overall decline in permanent placements.

"According to the survey panel, economic uncertainty is resulting in a number of employers placing jobs on hold and taking longer to make recruitment decisions. Last week's autumn statement contained a number of welcome measures aimed at helping businesses to grow and to ease red tape around employment but they are unlikely to make much difference in the short term."