February sees fresh reduction in permanent staff appointments - latest KPMG and REC report on jobs says

In contrast, temporary billings continued to rise, but the rate of growth slowed to a six-month low. 

Notably, the Midlands was the only monitored English region to see an increase in temp billings in February according to the research, compiled by S&P Global.

Looking at staff demand, both permanent and temporary vacancies declined at stronger rates. Redundancies and fewer job openings led to a steeper rise in permanent candidate supply. Conversely, the availability of short-term staff fell for the first time in 34 months amid reports that workers were hesitant to seek out temporary roles amid greater economic uncertainty. On the pay front, both starting salaries and average hourly wages increased, but rates of inflation remained weak by historical standards.

The KPMG and REC, UK Report on Jobs: Midlands is compiled from responses to questionnaires sent to around 100 recruitment and employment consultancies across the Midlands.

A renewed decline in new permanent joiners was recorded across the region in February, marking the first month of decrease since last November. The pace of reduction was modest but stronger than the UK average. According to recruiters surveyed, the number of placements fell due to a drop in client demand and economic uncertainty.

Of the four monitored English regions, only the North of England saw a rise in permanent placements during February.

Survey data for February indicated a seventh straight monthly rise in billings received from the employment of short-term staff across the Midlands. Where recruiters reported an increase, this was linked to the commencement of new projects and greater demand for flexible workers. That said, the respective seasonally adjusted index dropped further since December to register a six-month low and signalled only a modest rise.

Nonetheless, the Midlands was the only English area of the four monitored to record growth in temp billings, with declines seen elsewhere.

Permanent vacancies fell rapidly across the Midlands in February, with reductions now noted on a monthly basis since June 2024. The pace of decrease quickened for a third straight month to the joint-strongest for a year. Moreover, the downturn across the Midlands was the most marked of the four monitored English regions.

Demand for temporary workers also deteriorated across the Midlands in February. The rate at which short-term vacancies decreased was the most pronounced for a year and sharp.

Of the four tracked English regions, only the North of England recorded higher vacancies for both permanent and temp staff in February.  

Permanent staff availability rose across the Midlands in February, with the pace of expansion stronger than in January, indicating a marked rise which was in line with the wider UK trend. There were widespread reports that the latest increase was largely due to redundancies which had led to more job seekers.

In fact, all of the four tracked English regions recorded marked expansions in permanent labour supply, led by the North of England. The softest upturn was seen in London, which was also the only area where the pace of expansion moderated since January.

A modest decline in temp staff supply was recorded across the Midlands in February, concluding a 33-month sequence of expansion. Moreover, the Midlands was the only monitored English area to record a fall in temp candidate numbers.

Starting salaries across the Midlands rose again in February, stretching the current run of inflation to exactly five years. Though below the long-run average, the respective seasonally adjusted index ticked up to a three-month high. It also marked the strongest rate of salary growth of the four monitored English regions. Some panellists noted hiring for more senior roles had pushed up pay.

Permanent salaries rose across all four monitored English areas, albeit at historically muted rates.

A third successive monthly increase in temp wages was recorded across the Midlands in February. According to anecdotal evidence, shortages of particular candidates drove up pay rates.

Kate Holt, people consulting partner in the Midlands at KPMG, which has a regional base in Birmingham, said of the data: "February’s data points to a more cautious hiring environment across the Midlands. Permanent placements fell for the first time in three months as client demand softened and economic uncertainty weighed on employers’ decision-making, while vacancies for both permanent and temporary roles also declined. Employers are no doubt looking ahead to the increase in the National Minimum Wage in April and assessing how it’s likely to impact their margins before committing to job postings.

"Despite this backdrop, the Midlands continued to show resilience in the temporary labour market. It was the only monitored region to record growth in temp billings – its seventh straight month of expansion. This highlights how employers are turning to flexible staffing to manage through uncertainty."

Neil Carberry, REC chief executive, added: "While February’s report is by no means a source of unalloyed celebration, it does suggest the worst of the hiring slowdown in the UK has passed. There may still be a few bumpy months to come, especially in light of global instability, but the stabilising trend we have seen so far this year has continued. It is notable that regions and sectors most exposed to the industrial strategy seem to be the liveliest. We are on the seventh straight monthly rise in billings received from the employment of short-term staff across the Midlands which is such a hub for business.

"A real turnaround requires growing confidence amongst businesses and consumers.  There is cash in the system to spend if consumers and businesses feel better – a core goal of policy should be to tackle this by reducing the cost of doing business, which will in turn address the rising cost of living. From a more practical approach to the Employment Rights Act, to energy costs, the impact of business tax rises and planning reform, there is plenty to do that could back businesses to grow and create jobs sustainably."