A recent survey by KPMG and the Recruitment and Employment Confederation (REC) has highlighted a significant rise in job-seekers. This increase is the largest seen since December 2020. The labour market is experiencing notable weaknesses.
Unemployment Trends
A closely monitored survey by KPMG and the Recruitment and Employment Confederation (REC) indicates that increased redundancies and a decline in job openings have driven a significant surge in job-seekers. This marks the 15th consecutive month of rising “staff availability”, with the latest increase being the most substantial since December 2020.
Unemployment has been on the rise in recent months, while wage growth has decelerated. This has prompted speculation that the Bank of England may cut interest rates this summer. Recruiters have noted that elevated interest rates have contributed to a slowdown in the labour market.
Decrease in Job Placements and Vacancies
The KPMG and REC Report on Jobs revealed a decline in both the number of new job placements and the number of vacancies. However, the decrease was not as sharp as in previous months. This suggests a continuing but manageable decline.
The report’s seasonally adjusted staff availability index, which measures the number of job-seekers, reached 62.2 in May, up from 60.4 in April. This index has been climbing since March of last year.
The increase is attributed to a mixture of redundancies, higher unemployment, and reduced demand for staff, the report stated.
Permanent Positions and Vacancy Rates
The number of people securing permanent positions through recruiters has now declined for 20 consecutive months.
While the demand for staff, as evidenced by vacancy rates, also dropped, the decrease was described as “fractional.”
Jon Holt, Chief Executive of KPMG UK, commented on the findings, highlighting the complexities of the current labour market.
Comments from Jon Holt
“The big picture is that unemployment remains historically low, with the ease of filling vacancies returning to pre-pandemic levels,” Holt stated.
He added, “With today’s data, anticipated interest rate cuts, easing inflation, and increased consumer confidence over the summer, we can hopefully look forward to a better economic outlook for the second half of 2024.”
Recent official data indicated that the unemployment rate rose to 4.3% between January and March, up from 3.8% in the previous quarter.
Underlying Factors
Elevated interest rates have contributed to a slowdown in the labour market, impacting both job-seekers and employers.
The decline in job placements is due to reduced demand for staff and higher unemployment rates.
The increase in job-seekers is influenced by a mixture of redundancies and economic uncertainties.
Market Reactions
Employers are adapting to the changing conditions by being more cautious with their hiring strategies.
The anticipation of interest rate cuts by the Bank of England is creating a sense of cautious optimism.
Market analysts are closely watching these developments to assess their long-term impact on the employment market.
Future Outlook
The labour market is expected to remain challenging, but there are signs of potential recovery.
Key indicators such as interest rates and inflation will play a significant role in shaping the future job market.
The surge in job-seekers underscores the current weaknesses in the labour market. However, with potential interest rate cuts and easing inflation, there is hope for a better economic outlook in the near future.
The data from the KPMG and REC report provides a comprehensive overview of the employment landscape, highlighting both challenges and opportunities for recovery.