UK Labour Market October 7 th 16 The most up-to-date source of monthly UK labour market data and analysis Report on Jobs Staff appointments rise again in September The Report on Jobs is a monthly publication produced by IHS Markit and sponsored by the Recruitment and Employment Confederation. The report features original survey data which provide the most up-todate monthly picture of recruitment, employment, staff availability and employee earnings trends available. Staff Appointments via Recruitment Consultancies = no change on previous month 75 Temp/Contract Billings Permanent Placements 1 Executive summary 2 Appointments 1998 1999 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 3 Vacancies 4 Sectoral demand 5 Staff availability 6 Pay pressures 7 Special feature Key points from the September survey: Permanent placements and temp billings increase moderately Solid growth of permanent salaries but temp pay at -month low Slower decline in staff availability Commenting on the latest survey results, REC Director of Policy Tom Hadley says: This month s report contains further evidence that UK employers have shrugged off the initial shock of the referendum result. Overall, permanent hiring is in growth for the second consecutive month. Even more encouraging is the growth in vacancies; consumer confidence and strong demand on businesses has ensured that hirers are creating new jobs. IHS Markit Henley on Thames Oxon RG9 1HG, UK Tel: +44 1491 461000 Fax: +44 1491 461001 email: economics@ihsmarkit.com Copies of the report are available on annual subscription from IHS Markit. For subscription details please contact: economics@ihsmarkit.com There remains a degree of caution in London, where permanent hiring has been on pause for the last five months. This is likely to be because of uncertainty around the longer-term impact of the referendum result within the financial sector in particular. There are indications that the gap between pay growth and inflation is narrowing, which could present a threat to sustainable economic growth. We hope the government will address this issue in the Autumn Statement with fiscal stimulus. This should help to settle the nerves so that employers feel confident enough to keep hiring. We also urge the government to be mindful of talent shortages faced by many UK employers. Despite some of the rhetoric at this week s Conservative Party conference, we will continue to need workers from overseas in a range of sectors, from engineering to healthcare. The business community must have a role in developing an immigration model that strikes the right balance.
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 September are: Permanent placements rise for second successive month... September data showed a second straight monthly rise in permanent staff placement volumes, after the declines seen in June and July. Temporary/contract staff billings also rose, albeit at a slower pace compared with August s three-month high. In both cases, rates of growth remained slight overall. Permanent Placements 1998 1999 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16...supported by sharper increase in vacancies Demand for staff continued to rise in September, with the pace of growth picking up to a three-month high. The strongestperforming category for permanent staff was Engineering, while Hotel & Catering workers were the most sought-after type of temp staff. Demand for staff = no change on previous month 75 Temp/Contract Vacancies Candidate availability falls, but at slower rate The availability of staff to fill permanent roles continued to fall in September. Although remaining marked, the rate of decline eased to the slowest in almost three years. Similarly, temporary/contract staff availability deteriorated at a weaker pace. Permanent Vacancies 1998 1999 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 Temp pay growth slowest since May 13 Average starting salaries for candidates placed in permanent jobs rose further in September. The rate of growth was similar to August s solid pace. Temporary/contract staff pay however increased at the weakest rate in months. 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 14 15 16 All Intellectual Property Rights owned by IHS Markit
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. Staff Appointments via Recruitment Consultancies = no change on previous month 75 Temp/Contract Billings Latest data from the survey of recruitment consultants signalled modest increases in both permanent and temporary/contract staff appointments during September. Permanent placements rise for second month running The number of people placed in permanent jobs rose again in September, having returned to growth in August. That said, the rate of expansion remained marginal overall. Panellists commented on rising client demand for staff, although skill shortages continued to be reported as a factor putting a brake on growth. Permanent placements rose fastest in the Midlands during September. However, London saw a further reduction in volumes. Permanent Placements 1998 1999 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 Growth of temp billings eases Agencies billings from the employment of temporary/contract staff rose further during September. However, the rate of expansion moderated from August s three-month high. Growth of short-term staff billings was broad-based across the monitored English regions in the latest survey period, but Scotland saw a slight fall. 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. 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 16 Apr 38.1 34.1 27.8 10.4.2 53.4 May 37.1 31.5 31.4 5.7 52.9 52.9 Jun 33.4 34.7 31.8 1.6.8 49.3 Jul 28.1 34.0 37.9-9.8.1.4 Aug 32.5 33.7 33.8-1.3 49.3 51.1 Sep 38.0 31.3.7 7.3 53.6 51.0 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 16 Apr 34.9 43.7 21.4 13.4 56.7 59.1 May.3 42.3 22.4 12.9 56.5 56.4 Jun 32.3 46.3 21.4 10.9.4 52.3 Jul 34.3 41.1 24.7 9.6 54.8 51.6 Aug.7.2 24.2 11.5.7 54.5 Sep 33.9 42.3 23.8 10.1.1 52.6
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. Vacancies rise at faster rate Demand for staff strengthened in September, with the Report on Jobs Vacancy Index climbing to 56.9, from.3 in August. The latest reading was the highest in three months. Permanent and temporary vacancies both rose at sharper rates in the latest survey period. Public & private sector vacancies Private sector demand for staff continued to rise strongly in September, with permanent and temporary roles both seeing marked growth. In the public sector, temporary vacancies rose at a moderate pace whereas available permanent roles continued to fall. Other vacancy indicators Latest official data from the Office for National Statistics (ONS) signalled that vacancies rose 0.3% on an annual basis in the three months to July. That was the weakest growth in over four years. Internet-based recruitment spending fell -5.6% on a yearon-year basis in the opening quarter of 16 the second consecutive quarterly drop. 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 14 15 16 Job Vacancy Indicators May 16 Jun Jul Aug Sep Job Vacancy Index (recruitment industry survey) = no change on previous month Total 59.6 58.0.6.3 56.9 Permanent Staff 59.6 58.0.5.2 56.8 Temporary Staff 59.6 58.2 56.8 57.0 57.9 Public & private sector vacancies (not seasonally adjusted) Public: perm.7.4 51.5 47.1 47.0 Public: temp 52.0 53.0.3 53.0 53.0 Private: perm 62.0 58.6 56.2.2 61.6 Private: temp 61.9 63.2 58.2.2 61.9 Other key vacancy data Annual % change Job centre vacancies 2.3 2.2 0.9 1.3 n/a Internet recruitment -5.6 -- -- -- -- Sources: Job centre vacancies provided by ONS via EcoWin. Internet recruitment spending provided by WARC.com All Intellectual Property Rights owned by IHS Markit
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 Engineering was top of the demand for staff league table in September, ahead of Nursing/Medical/Care and IT & Computing. At the bottom of the table was Construction, where only a marginal increase was recorded. This year (Last year) Rank Sep'16 Rank Sep'15 Engineering* 1 61.3 (6) (62.7) Nursing/Medical/Care 2 59.3 (1) (66.5) IT & Computing 3 58.9 (5) (63.6) Executive/Professional 4 56.8 (4) (64.6) Accounting/Financial 5 56.4 (2) (.8) Secretarial/Clerical 6 54.2 (7) (61.3) Hotel & Catering 7 54.0 (8) (.2) Blue Collar 8 53.8 (9) (54.1) Construction* 9.5 (3) (64.7) Demand for staff = no change on previous month Secretarial & Clerical Accounting & Financial 02 04 06 08 10 12 14 16 02 04 06 08 10 12 14 16 Executive & Professional IT & Computing 02 04 06 08 10 12 14 16 02 04 06 08 10 12 14 16 Temporary/contract staff Broad-based growth of demand was signalled for temporary/ contract staff in September. Hotel & Catering was the most sought-after category, with Engineering in second place. As with permanent staff, Construction posted the slowest rise. This year (Last year) Rank Sep'16 Rank Sep'15 Hotel & Catering 1 62.9 (7) (58.1) Engineering* 2 61.4 (5) (58.9) Nursing/Medical/Care 3.6 (1) (64.0) Secretarial/Clerical 4 59.3 (3) (59.5) Blue Collar 5 58.7 (6) (58.4) IT & Computing 6.6 (4) (59.0) Accounting/Financial 7 53.1 (2) (59.6) Executive/Professional 8 52.1 (9) (54.8) Construction* 9.6 (8) (56.5) Blue Collar 02 04 06 08 10 12 14 16 Nursing/Medical/Care 02 04 06 08 10 12 14 16 Hotel & Catering 02 04 06 08 10 12 14 16 Engineering 13 14 15 16 *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. Construction 13 14 15 16
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 The availability of permanent staff continued to fall in September. Although remaining marked, the rate of decline eased to the slowest in almost three years. Permanent candidate availability deteriorated in each of the monitored regions, with the Midlands seeing the sharpest drop and Scotland the slowest. Availability of temp/contract staff Temporary/contract staff availability deteriorated further in September. The latest reduction was again marked, albeit the slowest in three months. London posted the sharpest decline in short-term staff availability. Scotland bucked the general trend, registering an improvement. 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 14 15 16 Availability of permanent staff Q. Is the availability of candidates for permanent vacancies better, the same or worse than one month ago? Key permanent staff skills reported in short supply:* Accountancy/Financial: Accountants, Audit, Compliance, Risk. Blue Collar: HGV Drivers. Construction: Architects, Managers. Engineering: Automotive Engineers, Design Engineers. IT/Computing: Digital Marketing, Games, Java, SQL. Nursing/Medical/Care: Care Workers. Other: Customer Service, Pharmaceuticals, Sales, Scientists, Supply Chain, Toolmakers. Key temp skills reported in short supply:* Accountancy/Financial: Audit, Compliance, Risk. Blue Collar: Bricklayers, Carpenters, Electricians, Labourers, LGV Drivers, Warehouse, Welders. IT/Computing: Developers, Digital, Games. Nursing/Medical/Care: Care Workers. Secretarial/Clerical: Admin, Reception, Office Staff. Other: Call Centre, Customer Service, Pharmaceuticals, Scientists, Pharmaceuticals, Telesales. *consultants are invited to specify any areas in which they have encountered skill shortages during the latest month Better Same Worse Net Index S.Adj. % % % +/- Index 16 Apr 12.4 58.7 28.9-16.5 41.7.9 May 10.9 59.0.1-19.2.4 41.5 Jun 9.7 57.8 32.5-22.8 38.6.7 Jul 11.7 53.1.2-23.5 38.2 42.3 Aug 10.3 49.2.5 -.2 34.9.5 Sep 15.2 56.5 28.3-13.1 43.5 42.6 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 16 Apr 13.5 63.1 23.4-9.9.1.7 May 12.0 64.6 23.3-11.3 44.3 46.0 Jun 16.3 59.1 24.6-8.3.8 46.5 Jul 10.6 61.2 28.2-17.6 41.2 43.6 Aug 12.3 53.4 34.2-21.9 39.0 42.3 Sep 16.6 53.5.0-13.4 43.3 44.6 All Intellectual Property Rights owned by IHS Markit
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 Permanent staff salaries continued to rise in September, with the rate of growth little-changed from August s solid pace. Stronger demand, candidate shortages and higher volumes of senior roles were reported to have contributed to the latest increase in salaries. Scotland again posted the sharpest rate of salary growth in the latest survey period. Temp/contract pay rates Hourly rates of pay for staff in short-term employment rose further in September. However, the rate of growth eased to a -month low. In some cases, there were reports of tight client budgets. Temp pay rose fastest in the South, with moderate increases seen elsewhere (with the exception of London, where temp pay stagnated). 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 14 15 16 UK average weekly earnings Data from the Office for National Statistics indicated that annual growth of employee earnings (including bonuses) eased to 2.3% in the three months to July 16. Pay growth eased in both the private and public sectors. Yr/yr % chg in average weekly earnings (3mma) Annual percent change 9 6 3 0-3 -6 Public sector 13 14 15 Apr'16 May Jun Jul Whole economy 1.2 1.2 2.5 2.0 2.3 2.5 2.3 Private sector 1.4 1.4 2.8 2.1 2.6 2.6 2.4 Public sector 0.9 0.3 0.9 1.7 1.7 1.7 1.6 Services 1.1 1.0 2.6 1.6 2.0 2.2 2.1 Manufacturing 2.3 2.2 1.3 1.7 2.2 2.3 2.6 Construction 0.3 0.9 4.3 8.2 8.2 8.6 6.5 Private sector 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 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 16 Mar 24.5.9 4.5.0.0 59.9 Apr 26.0 68.8 5.2.8.4 59.1 May 22.0 74.2 3.8 18.2 59.1 58.2 Jun 17.3 78.9 3.7 13.6 56.8 56.8 Jul 13.4.4 6.2 7.3 53.6 52.8 Aug 17.8 76.3 5.9 11.8.9.7 Sep 16.9 78.0 5.1 11.8.9.4 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 16 Mar 16.1 79.5 4.4 11.7.9.1 Apr 24.3 71.6 4.1.2.1.5 May 19.7 75.4 5.0 14.7 57.3 58.2 Jun 15.7 77.9 6.4 9.4 54.7.5 Jul 12.7 82.5 4.8 7.8 53.9 54.2 Aug 12.1 83.9 4.0 8.0 54.0 54.2 Sep 10.8 82.4 6.8 4.0 52.0 52.2
7 Feature Earnings Gap between earnings growth and inflation narrows Latest data from the Office for National Statistics indicate a slight softening of earnings growth in the three months to July. Average weekly earnings (excluding bonuses) rose 2.1% on an annual basis, the slowest increase since the turn of the year. Meanwhile, the annual rate of consumer price inflation was 0.6% in August, the same as in July. The gap between earnings growth and inflation now stands at its lowest for one-and-a-half years, and looks set to narrow further in the months ahead. Sterling s depreciation this year has pushed up the cost of imported raw materials, and it seems a matter of time before this feeds through into higher consumer price inflation. If earnings growth maintains its subdued trend, consumer spending is likely to be constrained and weigh on economic growth in the coming quarters. Pay growth % change y /y 8 6 4 2 0 Consumer price inflation A v erage earnings (ex bonus ) -2 01 03 05 07 09 11 13 15 Source: ONS via Datastream. The Recruitment & Employment Confederation (REC) is the professional body for the UK s 28.7 billion recruitment industry. The REC represents 3,349 corporate members who have branches across all regions of the UK. In addition, the REC represents 5,759 individual members within the Institute of Recruitment Professionals (IRP). All members must abide by a code of professional practice. Above all, the REC is committed to raising standards and highlighting excellence throughout the industry. Find out more on www.rec.uk.com. IHS Markit (Nasdaq: INFO) is a world leader in critical information, analytics and expertise to forge solutions for the major industries and markets that drive economies worldwide. The company delivers next-generation information, analytics and solutions to customers in business, finance and government, improving their operational efficiency and providing deep insights that lead to well-informed, confident decisions. IHS Markit has more than,000 key business and government customers, including percent of the Fortune Global 0 and the world s leading financial institutions. Headquartered in London, IHS Markit is committed to sustainable, profitable growth. Website: ihsmarkit.com Recruitment Industry Survey The monthly survey features original research data collected via questionnaire by IHS Markit from a panel of 0 UK recruitment and employment consultancies. In 14/15, 1,197,928 people were employed in either temporary of contract work through consultancies and 633,992 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. IHS 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 or licensed to IHS Markit. Any unauthorised use, including but not limited to copying, distributing, transmitting or otherwise of any data appearing is not permitted without IHS Markit s prior consent. The publication or release of any of these data prior to the general release time is an infringement of IHS Markit Economics Limited s intellectual property rights. IHS 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 IHS Markit be liable for any special, incidental, or consequential damages, arising out of the use of the data. Purchasing Managers Index and PMI are either registered trade marks of Markit Economics Limited or licensed to Markit Economics Limited. IHS Markit is a registered trade mark of IHS Markit Limited. All Intellectual Property Rights owned by IHS Markit