REC/KPMG Report on Jobs: Jobs sector gaining strength

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A growth in the labour market continues to be witnessed

The latest Recruitment and Employment Confederation (REC) and KPMG Report on Jobs has highlighted some interesting developments for UK industry over recent months.

According to the report for January, permanent and temporary appointments for staff continue to rise, while the number of vacancies being created by companies of all sizes also continues to grow.

Overall, the number of permanent staff placements remained a positive point for the sector in January, despite the fact the rate of growth in this area diminished to a 20-month low. Meanwhile, the amount of available candidates to fill the growing number of jobs reduced during the month, although the pace of decline was itself at the weakest rate for the past 11 months.

Strengthening of jobs market in the north of England

A four-month high was reached for the number of permanent positions being filled at companies across the north of England in January, bringing the total consecutive months of growth for the market in the region to 21.

Furthermore, the rate of expansion for the sector was stronger in the north than for the rest of the country in general - a development that continues to stand businesses operating in the region in excellent stead.

A 35-month streak of positive salary growth has also been registered for the north of England in this latest update, with robust growth in levels of remuneration a sign of a strengthening market overall.

Companies in the area are increasingly looking to attract the best workers away from other regions - including the capital - but in order to do this the rate of pay typically offered in the north has had to rise sharply.

This development bodes well for future prosperity both for the region and the nation as a whole though, as a stronger northern economy will continue to provide growing impetus towards UK economic growth.

Weaker demand for staff in the south

Demand for staff in the south of England saw a small decline in the latest set of published figures, but overall strength in the labour market was maintained.

Businesses continue to look to take on both permanent and temporary workers at a strong rate, with a growing level of confidence demonstrated as a result of the ongoing strengthening of the nation's economy and the drive towards a sustained recovery in general.

According to REC/KPMG's findings, the rate at which the labour marketing is growing in the region fell to a 15-month low in January; although it is important to note this does not denote a reduction in the market, simply a slowdown in growth.

The availability of permanent staff across the area rose for the 19th successive month, while a fall in the volume of temporary candadiates was seen for the 17th month in a row.

These developments coupled with the lower rate of employee uptake overall for the region meant the market remained fairly stable in January, albeit at a slightly lower level than in recent months.

London salary growth continues to accelerate

Permanent salary inflation in the capital registered a six-month peak in January, as companies continue to aim to offer the most attractive remuneration packages to keep hold of their best and brightest.

Among all monitored regions, pay growth in London was the sharpest witnessed anywhere in the country and this continues to be a key attractor for individuals moving to the area.

Ingrid Waterfield, head of KPMG's People Practice in London, said: "January's data has shown a real thirst amongst employers in the capital for new, talented individuals to join their team and firms are evidently prepared to pay a premium in order to recruit the right people."

However, she added that it is also important to note that while many firms are now offering stronger starting salaries to staff to attract the top talent, the rate at which companies are offering these positions in the capital has now fallen to a 19-month low.

What the experts think

Responding to the full report, REC chief executive Kevin Green commented: "January saw more people secure a new permanent job via a recruiter than in December and the decline in the number of available candidates means competition for skilled workers is driving up pay.

"With record levels of employment and falling inflation, this means many workers should feel better off in 2015 than they did in 2014."

He added that growing business confidence is driving a significant growth in workforces across the country and while it is encouraging to see all aspects of the labour market on an upward trajectory at present, companies should be wary that this situation is unlikely to last forever.

Partner and head of business services at KPMG Bernard Brown stated: "They say good news comes in threes and it certainly seems to be the case for the UK economy. The past month has seen a rise in employment, a jump in the number of jobs being created and a growing number of firms prepared to pay more to land the best staff."