kpmg jul 2011

UK labour market 3rd August 2011

The most up-to-date source of monthly UK labour market data and analysis

Report on Jobs

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Staff Appointments via Recruitment Consultancies

Staff appointments increase at moderate pace in July

Commenting on the latest survey results, Bernard Brown, Partner and Head of Business Services at KPMG said:

“Permanent and temporary staff appointments have risen again in July, although at a very moderate pace.

“The good news is that we are seeing no further deterioration in the jobs market but growth is still much slower than at the beginning of the year.

“Employers across all sectors remain cautious about hiring new staff. The key reason for this is the uncertain economic outlook with domestic demand being weighed down by government cutbacks and falling real wages, while exports and investment are not strong enough to take up the slack.”

Markit Economics

Henley on ThamesOxon RG9 1EL, UK Tel: +44 1491 461000Fax: +44 1491 461001email: [email protected]

Copies of the report are available on annual subscription from Markit. For subscription details please contact:[email protected]

The Report on Jobs is a monthly publication produced by Markit and sponsored by the Recruitment and Employment Confederation and KPMG LLP.

The report features original survey data which provide the most up-to-date monthly picture of recruitment, employment, staff availability and employee earnings trends available.

1 Executive summary

2 Appointments

3 Vacancies

4 Sectoral demand

5 Staff availability

6 Pay pressures

7 Special feature

Key points from July survey:

Modest rises in permanent placements and temporary billings

Demand for staff grows at slowest pace in eight months

Pay growth quickens from June’s low but remains muted

Faster improvement in candidate availability

Report on Jobs | Recruitment Industry Survey Report on Jobs | Recruitment Industry Survey

The Report on Jobs is unique in providing the most comprehensive guide to the UK labour market, drawing on original survey data provided by recruitment consultancies and employers to provide the first indication each month of labour market trends. The main findings for July are:

Modest rise in staff appointments Recruitment consultants reported further increases in the number of people placed into both permanent and temporary job roles during July. Rates of growth quickened slightly from June’s lows but remained below long-run trends.

Slower growth of vacanciesDemand for staff continued to rise in July, but the rate of expansion eased further to the slowest for eight months. The most sought-after workers were those in the engineering & construction and IT sectors, while the weakest demand trends were signalled for employees in the hospitality and healthcare categories.

Pay inflation picked up but still subduedGrowth of both permanent salaries and temp hourly rates quickened in July, but remained below their respective averages since the start of the survey in October 1997.

Faster rise in candidate availabilityHigher levels of staff availability were reported in July. Permanent candidate supply improved at the sharpest rate for 18 months, while the latest rise in temp availability was the strongest since February.

1 Executive summary

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All Intellectual Property Rights owned by Markit Economics Limited


Recruitment consultancies report on the number of people placed in permanent jobs each month, and their revenues (billings) received from placing people in temporary or contract positions at employers.

July survey results indicated that growth of staff appointments was maintained, albeit at a subdued pace. Both permanent placements and temp billings increased at slightly faster rates compared with lows recorded in June.

Permanent placements rose at modest pace...The number of people placed in permanent jobs by recruitment consultants increased further in July, bringing the current period of continuous growth to two years. However, the rate of expansion remained modest and was only slightly faster than June’s 22-month low. Where a rise in placements was recorded, this was generally attributed to increased demand for staff and higher client activity levels. Those panellists that noted a decline in placements commented on uncertainty among employers and associated delays in hiring decisions.

...while temp billings also increasedAgencies’ billings from the employment of temporary/contract staff continued to rise at a moderate pace in July, although growth remained well below the strong rates seen at the start of the year. Survey respondents attributed higher short-term staff appointments to a further rise in temp vacancies at employers. However, there were reports of budget constraints at a number of clients, particularly those in the public sector. An index reading above 50 signals a higher number of placements/billings than the previous month. Readings below 50 signal a decline compared with the previous month.

2 Staff appointments

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2011 Feb 42.4 35.0 22.7 19.7 59.9 62.7 Mar 46.5 32.6 20.9 25.6 62.8 59.7 Apr 41.6 37.5 20.9 20.6 60.3 60.6 May 39.3 31.8 28.9 10.4 55.2 55.1 Jun 33.9 39.7 26.4 7.5 53.7 52.2 Jul 36.5 33.9 29.6 6.9 53.5 52.4

Higher Same Lower Net Index S.Adj. % % % +/- 50=nochg Index

Permanent Staff PlacementsQ. Please compare the number of staff placed in permanent positions with the number one month ago.


Higher Same Lower Net Index S.Adj. % % % +/- 50=nochg Index

Temporary/Contract Staff BillingsQ. Please compare your billings received from the employment of temporary and contract staff with the situation one month ago.


Recruitment consultants are asked to specify whether the demand for staff from employers has changed on the previous month, thereby providing an indicator of the number of job vacancies. The summary indexes shown in this page are derived from the detailed sector data shown on page 5.

Growth of demand for staff eased to eight-month lowDemand for staff continued to rise in July, extending the current period of growth to 22 months. However, the rate of expansion moderated further to the slowest since November 2010. This was highlighted by the Report on Jobs Vacancies Index dropping from 55.9 to 54.3.

Permanent staff vacanciesThe number of job vacancies available to people seeking permanent employment increased further in July, albeit at the slowest pace in eight months. The Permanent Staff Vacancies Index posted 54.4, down from 56.1.

Temp/contract vacanciesThe Temporary Staff Vacancy Index registered 52.7 in July, down from 53.7 in the previous month. That signalled a moderate rise in demand for short-term workers that was the slowest since October 2010.

Other vacancy indicatorsData from the Office for National Statistics signalled a 5.4% reduction in job vacancies in June compared with one year previously. That was the second consecutive fall and the sharpest since January 2010.

Latest available data signalled that internet-based recruitment spending edged up by 0.7% in Q1 2011 after adjusting for inflation. That followed a -2.8% drop in Q4 2010.

The Job Vacancies Index monitors the overall demand for staff at recruitment consultancies. An index reading above 50 signals a higher number of vacancies than the previous month. Readings below 50 signal a decline compared with the previous month.

3 Vacancies

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Other key vacancy dataAnnual % change

Sources: Job centre vacancies provided by Office for National Statistics Internet recruitment spending provided by WARC.com

Total 60.3 59.1 57.5 55.9 54.3 Permanent Staff 60.4 59.3 57.6 56.1 54.4 Temporary Staff 59.1 56.4 55.2 53.7 52.7 Job centre vacancies 3.6 0.9 -4.2 -5.4 n/a Internet recruitment -- 0.7 -- -- --



Recruitment consultancies are requested to compare the demand for staff according to sector with the situation one month ago.

Permanent StaffHigher levels of demand were recorded for seven of the eight categories of permanent staff monitored by the survey in July. The strongest rates of expansion were signalled for Engineering/Construction and IT & Computing. The only sector where a reduction in vacancies was recorded was Hotel & Catering.

4 Demand for staff by sector


Demand for staff

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This year (Last year) Rank Jul'11 Rank Jul'10

This year (Last year) Rank Jul'11 Rank Jul'10

Data are presented in the form of diffusion indices whereby a reading of 50 indicates no change on the previous month. Readings above 50 signal stronger demand than a month ago. Readings below 50 signal weaker demand than a month ago.

Engineer’g/Construction 1 60.1 (1) (60.0)IT & Computing 2 55.5 (3) (56.5)Secretarial/Clerical 3 53.2 (4) (55.4)Blue Collar 4 52.4 (2) (57.8)Accounting/Financial 5 52.4 (6) (53.1)Executive/Professional 6 51.8 (5) (55.3)Hotel & Catering 7 46.2 (7) (51.7)Nursing/Medical/Care 8 45.2 (8) (46.1)

Engineer’g/Construction 1 60.9 (1) (63.2)IT & Computing 2 60.3 (3) (59.3)Executive/Professional 3 57.0 (2) (60.4)Accounting/Financial 4 53.7 (5) (57.2)Secretarial/Clerical 5 51.0 (4) (58.1)Blue Collar 6 50.6 (6) (53.0)Nursing/Medical/Care 7 50.4 (8) (51.7)Hotel & Catering 8 47.4 (7) (52.3)


Temporary/contract staffReductions in demand for staff were reported for two of the eight temporary/contract staff sectors in July, namely Nursing/Medical/Care and Hotel & Catering. Growth was signalled elsewhere, with the strongest rate of expansion indicated for Engineering/Construction employees.


Recruitment consultants are asked to report whether availability of permanent and temporary staff has changed on the previous month. An overall indicator of staff availability is also calculated.

Faster improvement in availability of candidatesRecruitment consultants reported another month of improving candidate supply during July. The rates of improvement in both permanent and temporary staff availability accelerated during the latest survey period.

Availability of permanent staffThe availability of workers to fill permanent jobs continued to increase in July. The latest improvement was the strongest for 18 months.

Availability of temp/contract staffGrowth of short-term staff availability quickened to a five-month high in July. Around 27% of panellists reported an improvement, compared with 15% that noted a reduction.

5 Staff availability

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2011 Feb 28.6 54.2 17.1 11.5 55.8 51.5 Mar 22.8 57.0 20.2 2.6 51.3 50.3 Apr 19.0 63.7 17.3 1.6 50.8 50.8 May 18.4 61.8 19.7 -1.3 49.4 50.6 Jun 18.0 61.7 20.4 -2.4 48.8 51.5 Jul 21.9 60.2 17.9 4.0 52.0 53.4

Key permanent staff skills reported in short supply:* Accountancy/Financial: Audit seniors, Insurance, Financial services. Engineering/Construction: Engineers, Technical roles. Hotel/Catering: Chefs. Secretarial/Clerical: General office. Other: Sales.

Key temp skills reported in short supply:* Accountancy/Financial: Accountants. Blue Collar: Labourers, Joiners, Builders, Maintenance, Drivers, Semi skilled. Hotel/Catering: Chefs. IT/Computing: SAP. Nursing/Medical/Care: Care workers. Secretarial/Clerical: General office.

Availability of permanent staffQ. Is the availability of candidates for permanent vacancies better, the same or worse than one month ago?

Higher Same Lower Net Index S.Adj. % % % +/- Index


Availability of temporary/contract staff

Q. Is the availability of candidates for temporary vacancies better, the same or worse than one month ago?



*consultants are invited to specify any areas in which they have encountered skill shortages during the latest month


The recruitment industry survey tracks both the average salaries awarded to people placed in permanent jobs each month, as well as average hourly rates of pay for temp/contract staff.

Permanent salariesAverage starting salaries for people placed in permanent jobs continued to rise in July. Although accelerating from June’s 20-month low, the rate of inflation remained below the survey’s long-run average. Where a rise in salaries was reported, this was generally attributed by panellists to competition for candidates with specific skill-sets.

Temp/contract pay ratesGrowth of short-term staff pay rates quickened from June’s five-month low in July, but remained modest compared with the survey’s historical trend. Anecdotal evidence suggested that budget restrictions at clients had constrained temp pay increases during the latest survey period.

6 Pay pressures

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2011 Jan 11.6 81.8 6.6 5.0 52.5 54.1 Feb 13.8 79.8 6.4 7.4 53.7 53.7 Mar 15.7 78.5 5.8 9.9 55.0 55.3 Apr 18.3 76.0 5.7 12.6 56.3 56.1 May 13.6 82.4 4.0 9.6 54.8 54.2 Jun 10.7 82.6 6.7 4.0 52.0 51.2 Jul 11.7 83.4 4.9 6.7 53.4 53.4


Permanent SalariesQ. Are average salaries awarded to staff placed in permanent positions higher, the same or lower than one month ago?

2011 Jan 7.1 84.5 8.4 -1.4 49.3 49.5 Feb 11.6 81.1 7.3 4.4 52.2 52.7 Mar 10.2 86.1 3.7 6.6 53.3 52.6 Apr 12.7 80.2 7.1 5.6 52.8 53.0 May 11.9 82.3 5.8 6.0 53.0 52.4 Jun 8.1 84.4 7.5 0.7 50.3 50.8 Jul 10.9 80.5 8.6 2.3 51.2 51.5


Temporary/Contract Pay RatesQ. Are average hourly pay rates for temporary/contract staff higher, the same or lower than one month ago?

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2008 2009 2010 Feb'11 Mar Apr MayWhole economy 3.8 0.0 2.3 2.2 2.4 2.0 2.3Private sector 3.7 -0.8 2.0 2.0 2.3 1.8 2.2Public sector 3.6 3.3 3.0 2.3 2.3 2.2 2.1Services 3.8 0.0 2.4 2.4 2.7 2.3 2.7Manufacturing 3.2 1.2 4.2 1.2 0.9 0.7 1.1Construction 2.7 0.5 0.0 -1.3 -0.3 -0.4 -0.7

UK average weekly earningsData from the Office for National Statistics signalled that annual growth of employee earnings (including bonuses) was 2.3% in the three months to May, up from 2.0% in April. The acceleration in pay growth was driven by a stronger increase in private sector earnings, as public sector pay growth eased slightly. Faster rises in earnings were recorded in both the services and manufacturing sectors. In contrast, construction saw another decline.


Report on Jobs | Recruitment Industry Survey

7 Feature productivity

KPMG is a global network of professional firms providing audit, tax and advisory services. KPMG LLP, a UK limited liabilitypartnership, istheUKmemberfirmofKPMGInternational,aSwisscooperative.KPMGLLPoperatesfrom22officesacrosstheUKwithnearly11,000partnersandstaff. TheUKfirm recordedaturnover of £1.6 billion in the year ended September 2009.

The KPMG Trademarks are the sole property of KPMG International and their use on this report does not imply auditing by or endorsement ofKPMGLLP,KPMGInternationaloranyofitsmemberfirmsoftheinformation in this report.

The REC is the association for the UK’s £22.5 billion private recruitment and staffing industry with more than 8,000 recruitment agencies and 6,000 recruitment consultants in membership. There are more than 1 million temporary workers registered with UK agencies who are deployed in industry, commerce and the public services every day.

Markit is a specialist compiler of business surveys and economic indices, including the Purchasing Managers’ Index®(PMI®) series, which is now available for 32 countries and key regions including the Eurozone. For more information e-mail [email protected] or call +44 1491 461000.

Recruitment Industry SurveyThe monthly survey features original research data collected via questionnaire by Markit from a panel of 400 UK recruitment and employment consultancies. In 2003/4, some 1,516,000 people were employed in either temporary or contract work through consultancies and over 565,500 people were placed in permanent positions through consultancies. Monthly survey data were first collected in October1997 and are collected in the end of each month, with respondents asked to specify the direction of change in a number of survey variables. Markitdonotreviseunderlyingsurveydataafterfirstpublication,butseasonal adjustment factors may be revised from time to time as appropriate which will affect the seasonally adjusted data series.

The intellectual property rights to these data are owned by Markit Economics Limited. Any unauthorised use, including but not limited to copying, distributing, transmitting or otherwise of any data appearing is not permitted without Markit’s prior consent. The publication or release of any of these data prior to the general release time is an infringement of Markit Economics Limited’s intellectual property rights. Markit shall not have any liability, duty or obligation for or relating to the content or information (“data”) contained herein, any errors, inaccuracies, omissions or delays in the data, or for any actions taken in reliance thereon. In no event shall Markit be liable for any special, incidental, or consequential damages, arising out of the use of the data. Purchasing Managers’ Index® and PMI® are registered trade marks of Markit Economics Limited. Markit and the Markit logo are registered trade marks of Markit Group Limited.

Productivity growth weakens

Productivity growth in the UK economy weakened further in Q1 2011, according to the most up-to-date official data available. Output per worker rose just 0.3% on an annual basis, down from 0.9% in Q4 2010 and the smallest gain in the current five-quarter period of improvement.

The headline measure of labour productivity has been weak since the end of the recession. This reflects a slow pace of recovery in output coupled with a steady increase in the number of workers in employment. In Q1 2011, the number of workers increased by 1.4% compared with a 1.7% rise in output.

Meanwhile, whole economy unit wage costs were 0.6% higher year-on-year in Q1 2011, compared with an increase of 1.0% in the fourth quarter of 2011. This deceleration is explained by a slower rise in wage costs per worker from 1.9% to 0.8%, partially offset by weaker growth in output per worker from 0.9% to 0.3%.

Sector data point to diverging trends. In the manufacturing sector, output per job increased by 4.4% in Q1 2011 compared with the same period a year previously. However, service sector output per job declined by 0.5%, continuing its recent weak trajectory.


Source: Office for National Statistics.

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