The KPMG and REC, UK Report on Jobs survey, compiled by S&P Global, signalled a further deterioration of UK labour market conditions during November.

Permanent placements continued to decline, and at the steepest pace since August 2023 as firms signalled reduced demand for staff. In many cases, recruitment consultants reported that firms were reassessing staffing needs and putting a pause on recruitment activity as they considered the impact on business performance of the late October UK government Budget.

Permanent salary growth remained modest as a result and was little changed on October’s 44-month low. Demand for staff also declined at the fastest since August 2020, whilst overall staff availability continued to rise amid reports of increased redundancies.

The report is compiled from responses to questionnaires sent to a panel of around 400 UK recruitment and employment consultancies.

The November survey signalled an accelerated decline in the number of people placed in permanent positions by UK recruitment consultants. Overall, the fall was the steepest recorded by the survey since August 2023 amid widespread reports of reduced vacancies.

Many respondents signalled that the UK government Budget in late October had led to uncertainty and the reassessment of staffing needs by clients. Similar factors led to a fifth successive decline in temporary staff billings.

Permanent salary growth was little changed on October’s 44-month low during November. Whilst skilled candidates were often reported to be able to command higher salaries, pay growth tended to be limited by higher candidate availability and reduced demand for staff. Temp pay rates similarly increased only modestly, and to a slightly lesser extent than in October.

Vacancy numbers declined at a sharp and accelerated pace during November. It was the thirteenth successive month in which a fall in staff demand has been registered, and the latest drop was the greatest recorded for over four years. An especially severe drop in demand was seen for permanent workers.

Amid reports of a growing number of redundancies at clients, recruitment consultants signalled the steepest rise in overall staff availability for three months in November. Latest data signalled similarly sharp growth rates for both permanent and temporary worker supply.

Permanent staff vacancies declined across all sub-sectors in November. Rates of contraction were generally faster than in the previous month and led by Executive/Professional.

Except for blue collar and hotel & catering, all sub-sectors saw a downturn in temporary staff vacancies in November. Executive/professional and IT/computing recorded the steepest contractions.

Jon Holt, KPMG group chief executive and UK senior partner, said: “Businesses are having to weigh up the prospect of increasing employee costs following the Budget, which has led to an accelerated slowdown in hiring activity across the board.

“While the data was already heading in that direction, permanent placements saw their steepest reductions in over a year last month, and temporary roles also saw a fifth consecutive decline.

“This slowdown, alongside a growing availability of candidates in the market could put more downward pressure on wage inflation, which remained largely unchanged on last month’s 44-month low. This trend will be encouraging for the bank’s monetary policy committee ahead of the next meeting later this month, although it may not be enough to counter wider inflationary pressures we are seeing in the economy.

“However, the prospect of further rate cuts through 2025, alongside the government’s investment plans, both point to improved growth in the near term. This should give businesses greater confidence which may help stabilise the labour market.”