Continuing signs of a cooling job market in the capital are reinforcing the need to focus on growth-busting measures in the Autumn Statement, according to data published today (Tuesday 17 October) from the KPMG and REC London labour-market pulse check, supported by BusinessLDN.
The report, which is based on data from S&P Global, drawing on responses from recruitment and employment consultancies, shows that the London index for hiring permanent roles rose from 40.4 in May to 47.7 in September. While this is slightly higher than the UK’s overall rating (45.1) it nevertheless marks the twelfth successive month of contraction, against a period of 19 previous months when hiring was growing.
After temporary billings in London declined for the first time since October last year in August, which is typically regarded as a slow month, they recovered in September to 54.6, not far behind their level in May (55.5).
The indexes for both permanent and temporary vacancies (46.8 and 49.1 respectively) have improved compared to May (45.2 and 46.7) but both remain in negative territory and below the UK average.
Anna Purchas, Senior London Office Partner at KPMG, said: “Employers across the capital took a cautious approach to hiring over the summer, with many waiting for more positive signs on the economic outlook to boost confidence and kick start recruitment plans again.
“Where employers in the capital are hiring, they are prepared to pay a premium for the right people, and it is likely that wage inflation will continue to be an issue as the fight for the best candidates continues. Medical and professional services specialists are amongst the most sought-after roles and employers in London are struggling to recruit on a permanent basis, whilst retail and hospitality staff are in high demand as the capital gears up for a busy Christmas.
“As we head to the end of the year, a rebalance in London’s labour market is needed to kick start growth and prompt economic recovery. More focus on reversing the deepening skills gap would be a step in the right direction to seize on the upturn when it comes.”
Neil Carberry, Chief Executive at REC, said: “It’s been a challenging year for businesses, but they tell us they are feeling cheerier as the economic mood music has improved recently. If this persists permanent hiring may pick up in the next few months. Firms have leaned on temporary work as they face uncertainty this year, and the market for temps has remained resilient because of this.
“Permanent placements have been falling for a year now but they started at unprecedented post-pandemic high. This looks like a jobs market that is finding the bottom of a year-long slowdown and will be ready to bounce back as the economy picks up pace.
“With labour supply in the UK still tight, companies want to see a focus on skills, finally reforming the system to deliver a mix of high-quality courses within the apprenticeship levy framework, and action to tackle inactivity, in the Autumn Statement.”
Muniya Barua, Deputy Chief Executive at BusinessLDN, said: “Now the interest rate cycle appears near its peak, it’s clear that slow growth is taking a toll on London’s labour market.
“While salaries are still rising, albeit at a slower rate than nationally, there are more candidates available for permanent and temporary roles, suggesting a slackening in the jobs market.
“Action to boost London’s competitiveness is now essential – from completing the Euston leg of HS2 to support long-term growth to short-term measures like restoring VAT-free shopping for international shoppers, signalling a long-term commitment to investment in levelling-up.”
Earlier this month, BusinessLDN published a five-point plan to help the UK escape the low-growth trap. This included measures to boost growth now and in the long run, including restoring VAT-free shopping for international visitors, agreeing a sustainable funding deal for Transport for London and increasing access to high quality, affordable childcare.