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Recruitment falls, but most employers still set to hire this year says REC/KPMG

Recruitment consultants signalled a drop in the number of people placed in permanent jobs for the third successive month in December, according to The Recruitment and Employment Confederation (REC) and KPMG Report on Jobs.

The rate of contraction was at a similar modest pace to that seen in November although 71% of employers still plan to increase their workforces over the course of 2012.

Agencies' billings from the employment of temporary/contract staff declined in December. Although marginal, it was the first reduction in almost two-and-a-half years.

Permanent staff salaries remained broadly stable in December, rising only fractionally on the month. Temporary/contract staff hourly pay rates fell slightly for the first time since January.

Growth of candidate availability accelerated markedly in December. The latest increase in permanent staff availability was the sharpest in two years, while temp availability improved at the fastest rate since October 2009.

Kevin Green, chief executive of the REC, said: "The report highlights a third month of contraction in permanent placements and a reduction in the use of temps for the first time in more than two years. While the jobs market is tough it remains resilient and is functioning well. There are clearly signs of decline but we are nowhere near the lows seen in 2009 when the market deteriorated at a drastically faster rate than we are seeing today. Employers are still hiring and using temps in large numbers; however, they are starting the year on a cautious note and are taking their time to make workforce decisions. The quicker the Eurozone sovereign debt crisis is resolved and we get some economic visibility, the better it will be for employer confidence and the UK jobs market.

"The sector analysis shows that some sectors remain strong, namely engineering, technology, IT, office professionals and we've also seen a surprising increase in demand for nursing, medical and care despite ongoing austerity measures. However, the finance and accountancy market has been in negative territory for two consecutive months and the hotel and catering sector has seen a significant downturn over the past two months. This might be a short-term blip as we build up to a peak of demand around the Olympics itself but it could also be a worrying indicator of a lack of engagement in the Olympics from both business and consumers.

"Overall, the cautiousness in hiring seems to be driven by a lack of confidence in the wider economic situation than a significant downturn in demand. For example, in the last month's survey of employers (JobsOutlook), a total of 71% of them said they still intend to increase their permanent workforces in the coming year and this month's Report on Job shows that vacancies remain strong."

Bernard Brown, partner and head of business services at KPMG added: "It is a huge concern to see temporary placements falling in tandem with permanent employment opportunities, making it difficult to be optimistic about the employment market in 2012. The decline in temporary roles, seen for the first time in almost two-and-a-half years, is a clear indication that businesses are too nervous to even make short-term commitments, given the continued uncertainty across the Euro Zone and so much talk of a tough year ahead.

"With fewer jobs available, employers could be forgiven for thinking they have the pick of the market, but sadly the reality is far different. The latest data suggests that, in the key industries of engineering, construction and IT, attempts to fill the gaps that do exist remain unsuccessful. It seems that employers are refusing to offer jobs just to ensure vacancies are filled, meaning that long-term unemployment trends look set to continue."