KPMG/REC Report on Jobs – February 2025
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, including Glencourt Associates and employers to provide the first indication each month of labour market trends.
The main findings for February are:
Softer deterioration in recruitment activity
The latest KPMG/REC “Report on Jobs” survey indicated that staff hiring continued to decline during February, but not as quickly as at the start of the year.
The number of people placed into permanent job roles across the UK decreased again in February, thereby stretching the current sequence of contraction to nearly 2½ years. Whilst the rate of decline was the least pronounced in four months, it remained historically sharp overall.
Recruiters frequently cited that weaker confidence around the economic outlook and rising payroll costs had led firms to cut back on hiring in the latest survey period. All four monitored English regions registered a drop in permanent staff appointments during February, led by the North of England.
Adjusted for seasonal influences, the Temporary Billings Index posted below the crucial 50.0 ‘no-change’ threshold in February, to signal a sustained decline in billings from the employment of short-term staff. The rate of contraction eased from that seen at the start of 2025, but was nonetheless the second-steepest recorded since June 2020. Temp billings have now fallen in each of the past eight months. According to panel members, the latest reduction was driven by weaker demand for staff, tighter client budgets and the non-renewal of temp contracts.
Starting salary inflation weakens to four-year low
Recruitment consultancies signalled a softer rise in starting salaries for permanent staff for the second straight month in February. Notably, the latest increase was the slowest seen over the current four-year period of inflation and only modest. Where higher salaries were reported, this was generally linked to an increase in market rates and efforts to attract skilled candidates. London and the Midlands registered higher permanent pay, while salaries were broadly unchanged in the South of England and fell in the North of England.
Average hourly rates of pay for temp/contract staff increased for the fifth successive month in February. Although the rate of wage inflation quickened from the start of the year, it remained marginal overall and slower than the series average. While some recruiters noted that companies had pushed up rates of pay to attract suitably-skilled workers, there were also reports that average wages had levelled off amid an improvement in overall candidate numbers.
Availability of workers increases at quicker pace
At 59.2 in February, the seasonally adjusted Total Staff Availability Index picked up from 57.7 at the start of the year to signal a sharper rise in the supply of overall candidates. The latest uptick stretched the current period of rising staff availability to two years, the longest period of growth since mid-2010.
Recruitment consultancies signalled a sharp and accelerated upturn in the availability of candidates for permanent roles during February. Permanent staff supply has now increased in each month of the past two years, with the latest expansion slightly quicker than the average seen over this period. Panellists frequently mentioned that redundancies and a lack of job opportunities had increased the pool of available workers. All four monitored English regions registered quicker upticks in permanent candidate numbers, with the Midlands noting the sharpest increase overall.
The availability of short-term/contract workers also increased at a quicker pace midway through the first quarter. Notably, the rate of growth edged up to a four-month high and was among the steepest seen over the current two-year sequence of expansion. Company lay-offs and fewer short term roles had pushed up the supply of temp workers, according to recruiters.
London registered by far the sharpest upturn in temporary candidate numbers, while the softest was seen in the South of England.
Demand for staff continues to fall rapidly
Vacancies across the UK declined for the sixteenth successive month in February. The rate of contraction was the second-sharpest since August 2020, with the respective seasonally adjusted index edging up only slightly from 41.6 in January to 41.8.
February data pointed to slightly softer, but still substantial declines in demand for both permanent and temporary workers. Permanent vacancies fell at a sharper pace than that seen for temp roles, with the respective index posting in contraction territory for 18 months in a row. Concurrently, demand for short-term staff fell for the seventh straight month.
Demand for staff fell across both the private and public sectors midway through the first quarter. The most pronounced declines in vacancies were seen in the public sector, with temporary roles falling at the sharpest pace since June 2020. Demand for permanent and temp staff in the private sector meanwhile fell at softer, but still solid rates.
Navigating the Recruitment Crossroads
Last month’s Report on Jobs found that both temporary billings and permanent placements declined sharply. This hiring slowdown feeds into the recent weaker pay growth facing British workers. Permanent salaries are rising, albeit at the slowest pace in four years.
One of the biggest challenges in today’s recruitment landscape is the disconnect between economic confidence and actual hiring activity. The latest REC Jobs Outlook shows us that whilst employer confidence in the economy remains negative (-25), hiring confidence showed notable improvement in the three months to December.
Despite the challenging outlook, S&P Global’s February Labour Market Tracker shows signs of optimism. In January 2025, job postings rose by 7.2% compared to December 2024, marking the first increase since June 2024. Recruiters have anecdotally told the REC that January sets the tone for hiring throughout the year. Therefore, the rise in job postings at the start of the year is a positive sign of growing confidence.
However, this optimism is tempered by the latest Report on Jobs, which indicates that hiring continued to decline in February, albeit at a slower pace than at the start of the year
For many years Glencourt Associates has been one of the selected companies that provides data for these monthly reports. For additional information behind this brief summary, contact Glencourt on 01342 712253.
