UK Labour Market 8 th November 13 The most up-to-date source of monthly UK labour market data and analysis Report on Jobs Permanent salaries rise at fastest rate since December 07 Staff Appointments via Recruitment Consultancies = no change on previous month 75 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-todate monthly picture of recruitment, employment, staff availability and employee earnings trends available. 1 Executive summary Temp/Contract Billings Permanent Placements 1998 1999 00 01 02 03 04 05 06 07 08 09 10 11 12 13 2 Appointments 3 Vacancies 4 Sectoral demand 5 Staff availability Key points from the October survey: Sharper increase in salaries as candidate availability deteriorates further Strong growth of permanent and temporary appointments maintained Overall vacancies rise at sharpest rate in over six years 6 Pay pressures 7 Special feature Commenting on the latest survey results, Bernard Brown, Partner and Head of Business Services at KPMG, said: Markit Henley on Thames Oxon RG9 1HG, UK Tel: +44 1491 461000 Fax: +44 1491 461001 email: economics@markit.com Copies of the report are available on annual subscription from Markit. For subscription details please contact: economics@markit.com For those who have set government policy the latest figures are great news, with higher numbers of job opportunities emerging alongside the sharpest increase in permanent wages for 6 years, as demand continues to strengthen. Whilst this is a sure sign of economic recovery, we must not get complacent because, in the higher earning bracket, left unchecked wage inflation will bring different challenges to businesses who strive for profitable growth. Another question that must be addressed revolves around whether increasing salaries are enough to entice job hunters to move between organisations. All the evidence suggests not, with permanent and temporary staff availability falling in recent months. It means employers cannot rely on wages alone as a hook to attract top talent. The time has come for them to develop a raft of offers as part of the overall remuneration package. If they fail to do so, they will struggle to recruit and bring their organisation back to pre-downturn levels.
1 Executive summary 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. Staff Appointments = no change on previous month =no change on previous month Temp/Contract Billings The main findings for October are: Staff appointments continue to grow strongly... Recruitment consultants signalled further increases in both permanent placements and temp billings during October. Although easing marginally since September, the rates of expansion remained considerable. Permanent Placements 1998 1999 00 01 02 03 04 05 06 07 08 09 10 11 12 13...supported by sharp rise in vacancies Overall demand for staff rose at the fastest pace since June 07. Higher vacancy levels were signalled for both permanent and temporary workers, in both the public and private sectors and across all monitored job categories. Permanent salary inflation accelerates... Starting salaries for successful permanent candidates rose further in October, with the rate of increase accelerating to the strongest since December 07. Temp pay rates also rose, albeit at the slowest pace in four months....amid growing shortages of qualified candidates Steeper falls in both permanent and temporary staff availability were reported in October, with the rates of decline the sharpest in around six years. Demand for staff = no change on previous month 75 Temp/Contract Vacancies Permanent Vacancies 1998 1999 00 01 02 03 04 05 06 07 08 09 10 11 12 13 Staff Availability and Earnings Growth = no change on previous month = no change on previous month (inverted) Skill shortages (Availability of staff inverted - RHS) Average permanent salaries (LHS) 1998 1999 00 01 02 03 04 05 06 07 08 09 10 11 12 13 All Intellectual Property Rights owned by Markit Economics Limited
2 Staff appointments 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. Recruitment consultants signalled further increases in both permanent and temporary staff appointments during October, with the rates of growth remaining marked. Permanent placements continue to rise strongly The number of people placed in permanent jobs by recruitment consultants rose further in October. The current period of expansion now extends to 13 months. Although easing slightly since September, the pace of expansion remained substantial. Around 43% of panellists noted an increase in permanent placements, versus 23% that indicated a decline. Anecdotal evidence highlighted improved client confidence and faster decision-making. All four monitored English regions saw higher permanent placements. The strongest growth was recorded in the Midlands, while the slowest expansion was indicated in London. Further marked growth of temp billings Agencies billings from the employment of temporary and contract staff increased for a sixth consecutive month in October. Although easing to the slowest since June, the rate of growth remained strong. The Midlands continued to post the strongest temp jobs growth during the latest survey period, while the South registered the slowest rise. An index reading above signals a higher number of placements/billings than the previous month. Readings below signal a decline compared with the previous month. Staff Appointments via Recruitment Consultancies = no change on previous month 75 Temp/Contract Billings Permanent Placements 1998 1999 00 01 02 03 04 05 06 07 08 09 10 11 12 13 Permanent Staff Placements Q. Please compare the number of staff placed in permanent positions with the number one month ago. Higher Same Lower Net Index S.Adj. % % % +/- = no chg Index 13 May 39.2.7.1 9.1 54.6 53.4 Jun 47.9 31.5.6 27.2 63.6 57.6 Jul 48.9 32.0 19.1 29.8 64.9 63.3 Aug 37.8 38.6 23.6 14.2 57.1 61.3 Sep 49.0 33.5 17.4 31.6.8 62.2 Oct 42.6 34.8 22.6.0.0 61.9 Temporary/Contract Staff Billings Q. Please compare your billings received from the employment of temporary and contract staff with the situation one month ago. Higher Same Lower Net Index S.Adj. % % % +/- = no chg Index 13 May 34.8 42.7 22.5 12.2 56.1 52.6 Jun 41.3 39.1 19.6 21.7.8 56.4 Jul 46.6 36.8 16.6.0.0 61.5 Aug 44.4.0 15.6 28.8 64.4 62.9 Sep 43.1 43.1 13.8 29.4 64.7 61.7 Oct.1 44.9 15.0.1 62.5 61.0
3 Vacancies 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. Fastest rise in vacancies since June 07 Demand for staff increased further in October, with the rate of growth quickening to the fastest in over six years. The Report on Jobs Vacancies Index registered 63.8, up from 63.6 in September. Marked increases in demand were signalled for both permanent and temporary/contract staff during the latest survey period. Public & private sector vacancies Private sector vacancies continued to rise at a faster pace than public sector roles in the latest survey period. In the private sector, permanent staff saw stronger demand growth than temporary/contract workers, while in the public sector the reverse was true. Other vacancy indicators Data from the Office for National Statistics showed that job vacancies were up 12.5% on an annual basis in the three months to September. Latest available data signalled that internet-based recruitment spending rose by 4.6% in the second quarter of 13. That was up from a pace of 2.3% in the first quarter. The Job Vacancies Index monitors the overall demand for staff at recruitment consultancies. An index reading above signals a higher number of vacancies than the previous month. Readings below signal a decline compared with the previous month. Job Vacancies = no change on previous month 75 Vacancy Index Temp/Contract Vacancies Permanent Vacancies = no change on previous month 75 1998 1999 00 01 02 03 04 05 06 07 08 09 10 11 12 13 Job Vacancy Indicators Jun 13 Jul Aug Sep Oct Job Vacancy Index (recruitment industry survey) = no change on previous month Total 59.3 61.1 63.7 63.6 63.8 Permanent Staff 59.4 61.1 63.7 63.6 63.9 Temporary Staff 58.2 61.6 63.9 62.8 62.6 Public & private sector vacancies (not seasonally adjusted) Public: perm 52.8 47.6 47.4 49.1 54.9 Public: temp.0 53.8 51.6 58.2 57.8 Private: perm 66.6 67.1.7 68.7.2 Private: temp 63.9.5 66.3.5 66.2 Other key vacancy data Annual % change Job centre vacancies 13.1 13.0 11.9 12.5 n/a Internet recruitment 4.6 -- -- -- -- Sources: Job centre vacancies provided by Office for National Statistics Internet recruitment spending provided by WARC.com All Intellectual Property Rights owned by Markit Economics Limited
4 Demand for staff by sector Recruitment consultancies are requested to compare the demand for staff according to sector with the situation one month ago. Permanent Staff All nine types of permanent staff monitored by the survey saw improved levels of demand for staff during October. The strongest growth was signalled for Engineering workers, followed by Construction staff and then IT & Computing employees. This year (Last year) Rank Oct'13 Rank Oct'12 Engineering* 1 71.6 n/a n/a Construction* 2 68.8 n/a n/a IT & Computing 3 66.4 (2) (56.4) Executive/Professional 4 66.3 (5) (54.1) Nursing/Medical/Care 5.2 (1) (57.8) Accounting/Financial 6 63.9 (3) (54.5) Secretarial/Clerical 7.7 (4) (54.2) Blue Collar 8 58.8 (6) (51.9) Hotel & Catering 9.8 (7) (49.0) Temporary/contract staff Higher demand was broad-based across all nine types of temporary/contract staff in October. Mirroring the trend signalled for permanent employees, the most sought-after category was Engineering. The slowest growth was recorded in the Executive/Professional category. This year (Last year) Rank Oct'13 Rank Oct'12 Engineering* 1 66.7 n/a n/a Blue Collar 2.4 (2) (.2) Nursing/Medical/Care 3.3 (1) (62.1) Construction* 4 63.5 n/a n/a IT & Computing 5 62.9 (4) (52.5) Accounting/Financial 6.8 (=5) (51.5) Secretarial/Clerical 7.3 (3) (54.9) Hotel & Catering 8.5 (=5) (51.5) Executive/Professional 9 54.5 (7) (49.4) *Non-seasonally adjusted data. Prior to April 13 Engineering/Construction was reported as a single category. Data are presented in the form of diffusion indices whereby a reading of indicates no change on the previous month. Readings above signal stronger demand than a month ago. Readings below signal weaker demand than a month ago. Demand for staff = no change on previous month Secretarial & Clerical 02 03 04 05 06 07 08 09 10 11 12 13 Executive & Professional 02 03 04 05 06 07 08 09 10 11 12 13 Blue Collar 02 03 04 05 06 07 08 09 10 11 12 13 Hotel & Catering 02 03 04 05 06 07 08 09 10 11 12 13 Accounting & Financial 02 03 04 05 06 07 08 09 10 11 12 13 IT & Computing 78 74 66 62 58 54 46 02 03 04 05 06 07 08 09 10 11 12 13 Nursing/Medical/Care 02 03 04 05 06 07 08 09 10 11 12 13 Engineering; Construction E ngineering P e rm T e m p C ons truc tion
5 Staff availability 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. Availability of permanent staff Permanent staff availability continued to fall in October. Moreover, the rate of decline accelerated to the sharpest since November 07. Lower permanent staff availability was signalled by % of panellists, twice the proportion that indicated a rise. All four English regions saw lower levels of permanent candidate availability in October, with rates of decline marked in each case. Availability of temp/contract staff The availability of candidates to fill temporary/contract roles fell further in October, with the latest reduction the fastest since June 07. Temp availability decreased in all regions, with the Midlands posting the steepest drop. Staff Availability = no change on previous month Staff Availability Index Improving availability Improving availability Deteriorating availability = no change on previous month Temp Availability Permanent Availability Deteriorating availability 1998 1999 00 01 02 03 04 05 06 07 08 09 10 11 12 13 Key permanent staff skills reported in short supply:* Accountancy/Financial: Accountancy, Finance, Insurance, Purchase ledger, Tax. Construction: Project managers, Quantity surveyors. Engineering: CAD/CAM designers, General engineering, Mechanical, Rail, Revit technicians, Utilities, Water. Executive/Professional: Legal, Managers, Marketing. IT/Computing: Business analysts, Developers, Digital marketing, Infrastructure, Java, PHP, Support. Nursing/Medical/Care: RGNs, RMNs. Other: Creative designers, Sales. Key temp skills reported in short supply:* Blue Collar: Drivers, Joiners, Production, Skilled labour. Construction: General construction. Engineering: Engineers, Technicians. Executive/Professional: Executives, Managers. IT/Computing: Developers, Infrastructure, PHP, SAP. Nursing/Medical/Care: Care assistants, Home carers, RGNs, RMNs. Secretarial/Clerical: Legal secretaries. Other: Account management, Sales, Telemarketers. *consultants are invited to specify any areas in which they have encountered skill shortages during the latest month Availability of permanent staff Q. Is the availability of candidates for permanent vacancies better, the same or worse than one month ago? Better Same Worse Net Index S.Adj. % % % +/- Index 13 May 16.3 64.1 19.6-3.3 48.4 49.6 Jun 15.5 61.0 23.6-8.1.9 48.3 Jul 13.0 56.3.7-17.6 41.2 44.2 Aug 13.9 58.3 27.8-13.9 43.0.7 Sep 19.0 51.6 29.4-10.5 44.8.3 Oct 14.8.2.0-15.3 42.4 42.9 Availability of temporary/contract staff Q. Is the availability of candidates for temporary vacancies better, the same or worse than one month ago? Better Same Worse Net Index S.Adj. % % % +/- Index 13 May 15.6 66.8 17.6-2.0 49.0 51.0 Jun 23.4 59.7 17.0 6.4 53.2 53.1 Jul 17.9.4 26.6-8.7.7 47.2 Aug 16.2 58.0.8-9.6.2 46.9 Sep 18.4.1 26.5-8.0 46.0 47.0 Oct 14.2 57.6 28.2-14.0 43.0 44.6 All Intellectual Property Rights owned by Markit Economics Limited
6 Pay pressures 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 salaries October data signalled a further rise in average starting salaries awarded to candidates placed in permanent jobs. Moreover, the rate of increase was the fastest since December 07. Panellists attributed higher salaries to improved demand for staff and shortages of qualified candidates. Permanent salaries rose in all four English regions, with the sharpest increase signalled in the Midlands. Temp/contract pay rates Temporary/contract staff hourly pay rates continued to rise in October, albeit at the slowest pace since June. A number of panellists commented that the uplift in the national minimum wage had acted to boost temp pay rates. The Midlands posted the fastest rise in temp pay, while the slowest increase was signalled in the North. Pay Pressures = no change on previous month Permanent Salaries Temp/Contract Hourly Pay Rates 1998 1999 00 01 02 03 04 05 06 07 08 09 10 11 12 13 UK average weekly earnings Data from the Office for National Statistics signalled that annual growth of employee earnings (including bonuses) eased to 0.7% in the three months to August, the slowest since the three months to March. Yr/yr % chg in average weekly earnings (3mma) Annual percent change 9 6 3 0-3 -6 Public sector 10 11 12 May'13 Jun Jul Aug Whole economy 2.3 2.4 1.4 1.8 2.2 1.2 0.7 Private sector 2.0 2.5 1.5 2.1 2.8 1.5 1.1 Public sector 3.3 2.5 1.6 1.3 0.9 0.5-0.5 Services 2.3 2.8 1.4 1.8 2.2 1.2 0.6 Manufacturing 4.0 1.6 1.8 2.7 2.6 2.1 2.1 Construction 0.3 0.8 0.8-0.4 0.9-0.6 0.3 Private sector 01 02 03 04 05 06 07 08 09 10 11 12 13 Permanent Salaries Q. Are average salaries awarded to staff placed in permanent positions higher, the same or lower than one month ago? Higher Same Lower Net Index S.Adj. % % % +/- Index 13 Apr 10.1 84.8 5.1 4.9 52.5 52.1 May 13.1.4 6.5 6.6 53.3 51.8 Jun 14.4 79.6 6.0 8.4 54.2 53.2 Jul 14.9 82.2 2.9 12.0 56.0 54.0 Aug 16.2.6 3.2 13.0 56.5 56.5 Sep 17.6 79.7 2.7 14.9 57.5 56.7 Oct 18.1 78.6 3.3 14.8 57.4 57.6 Temporary/Contract Pay Rates Q. Are average hourly pay rates for temporary/contract staff higher, the same or lower than one month ago? Higher Same Lower Net Index S.Adj. % % % +/- Index 13 Apr 7.7 86.8 5.5 2.2 51.1 51.6 May 8.6 87.1 4.4 4.2 52.1 52.0 Jun 11.9 83.7 4.4 7.5 53.7 53.9 Jul 15.7 81.3 2.9 12.8 56.4 56.8 Aug 12.1 85.0 2.8 9.3 54.7.3 Sep 14.3 82.5 3.3 11.0.5 56.0 Oct 18.0 78.5 3.5 14.4 57.2 54.0
7 Feature PMI employment trends Record rate of private sector job creation signalled in October Latest data from the Markit/CIPS Purchasing Managers Index (PMI ) surveys signalled that growth of employment across the UK private sector accelerated in October to a rate previously not seen in the 14-year series history. Stronger job hiring was underpinned by a survey-record increase in business activity at companies. Similarly, inflows of new business and backlogs of work rose at record rates in the latest survey period. A record pace of job creation in the service sector was joined by even stronger growth in construction (a six-year high). However, manufacturers signalled that the rate of employment growth eased from September s 27-month peak and was modest overall. PMI all-sector output and employment Markit/CIPS PMI Index, s a, = no c hange PMI output PMI employ ment 1998 00 02 04 06 08 10 12 PMI employment by sector Markit/CIPS PMI Employ ment Index, s a, = no c hange Manuf ac turing Serv ic es Cons truc tion 1998 00 02 04 06 08 10 12 Source: Markit KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and operates from 22 offices across the UK with over 12,000 partners and staff. The UK firm recorded a turnover of 1.8 billion in the year ended September 12. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. We operate in 156 countries and have 152,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. KPMG International provides no client services. The REC is the professional body representing the UK s 24.6 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 economics@markit.com or call +44 1491 461000. Recruitment Industry Survey The monthly survey features original research data collected via questionnaire by Markit from a panel of 0 UK recruitment and employment consultancies. In 10/11, some 1,049,333 people were employed in either temporary or contract work through consultancies and 4,193 people were placed in permanent positions through consultancies. Monthly survey data were first collected in October 1997 and are collected in the end of each month, with respondents asked to specify the direction of change in a number of survey variables. Markit do not revise underlying survey data after first publication, but seasonal 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. All Intellectual Property Rights owned by Markit Economics Limited