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Economic News

UK labour market ends 2023 on muted note

By Abigail Townsend

Date: Monday 08 Jan 2024

LONDON (ShareCast) - (Sharecast News) - UK firms remain reluctant to hire new staff, an industry survey showed on Monday, as the weak economic outlook continued to weigh heavily.
According to the latest UK Report on Jobs from KPMG and the Recruitment and Employment Confederation, recruitment intentions were subdued in December.

Permanent and temporary billings also declined, although at a softer rate than November.

The permanent staff placements index rose to 45.6 from 41.6 in November but remains below its 2022 average of 55.3.

The permanent staff salaries index rose to 56.5 from 56.0. It also remains below its 2022 average, of 71.8, however.

The permanent staff availability index fell to 58.7 from 61.9, while overall vacancies also declined slightly, for the third time in four months.

Survey respondents cited muted demand for staff and recruitment freezes, in light of wider economic conditions.

Justine Andrew, partner and head of education, skills and productivity at KPMG UK, said: "It's a muted end to the year for the labour market, which despite some loosening during 2023, continues to be tight.

"While the data for December shows hiring activity for both permanent and temporary roles fell at a softer rate than the previous month, businesses are still making redundancies and pausing hiring due to a lacklustre economic outlook."

Neil Carberry, REC chief executive, said: "Recruiters went into 2024 with hope that an upturn is coming, based on feedback from clients.

"Driving this economic growth would be a huge benefit for us all, leading to more successful firms, higher pay and the ability to cut taxes and fund public services. But the growth must come first."

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: "Labour market tightness is continuing to unwind faster than the Monetary Policy Committee anticipated in November's Monetary Policy Report, supporting the case for a modest reduction in Bank Rate this year.

"The balance is consistent with the unemployment rate rising by about 0.6 percentage points ever six months.

"Meanwhile, the net balance of recruiters reporting that salaries are rising for new hires remains consistent with a sharp slowdown in year-over-year growth in average weekly earnings, to about 3% by the end of the year."

A panel of around 400 UK recruitment and employment consultancies was surveyed between 6 and 18 December.

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