Professional staffing remains slow as outlook remains uncertain

• Permanent vacancies show 0% growth year-on-year
• Contract vacancies slide by 5%
• Demand for contractors in financial services plummets
• Average salaries dip by 0.3%    ?

?Professional recruitment firms reported that vacancy numbers flatlined in October with the number of permanent vacancies remaining unchanged year-on-year according to new survey data from the Association of Professional Staffing Companies (APSCo). This is in line with the latest data from the Office for National Statistics (ONS), which reported in October that the overall employment rate remained stagnant at 74.5% in the three months to September 2016 – representing no change in percentage points when compared to the three months to August 2016.

The ONS data shows that overall employment growth has slowed sharply - with the 49,000 rise in the three months to September down from August's 106,000 and well below the consensus forecast of 91,000.

The latest data from APSCo reveals notable variations between the trade association’s core sector groups in terms of hiring activity. While permanent vacancies across both financial services and marketing, for example, have increased (3% and 14% respectively), IT and engineering have both recorded dips of 6%.

Demand for contractors in financial services plummets 

Despite a recent analysis from EY finding that London could lose 83,000 banking jobs in the wake of Brexit, opportunities within the sector remained strong in October with permanent vacancies across financial services increasing by 3%.

However, temporary vacancies in the sector rose by just 1% during the same period, marking an end to a boom in demand for contractors witnessed in recent months. By comparison, in September opportunities for contractors increased by 8% year-on-year. In August this figure stood at 16%.

Engineering vacancies down 

Permanent vacancies within the engineering sector dipped by 6% year-on-year in October. This is in line with recent reports that UK industrial production fell unexpectedly in September, causing Britain’s trade deficit with the rest of the world to widen as exports dipped.

Average salaries down

APSCo’s figures also reveal that median salaries across all professional sectors dipped by 0.3% year-on-year. This figure is characterised by notable fluctuations in terms of sector, with IT, for example, recording an uplift of 3.3% while in banking average salaries were down 5.4% year-on-year. Average salaries within the professional sectors fall short of the national increase in pay as reported by the ONS which found that earnings grew at an annual rate of 2.4% in the three months to September 2016.

Ann Swain, Chief Executive of APSCo comments:

“There is no doubt that the economy has been more resilient in the months since the Brexit vote than many commentators were expecting. In August, the Bank of England was predicting growth of just 0.1% in the third quarter - it actually came in at 0.5%. And we avoided the economic downturn in the second half of 2016, which many had predicted, as consumers carried on spending despite market uncertainty.”

“However, as our latest data illustrates, the uncertain nature and timing of Brexit is now beginning to take its toll as we approach 2017. According to a recent survey of more than 1,000 firms by the Centre for Economic and Business Research, companies have abandoned plans for £65bn of investment since the Brexit vote.”

“This type of fall in confidence will, of course, impact hiring intentions. Which perhaps explains why economists and policymakers, including those at the Bank of England, are now expecting unemployment to rise as business takes a more cautious approach while Britain attempts to negotiate its way out of the EU, with the Bank predicting the jobless rate will rise to about 5.5% by mid-2018. The British Chambers of Commerce has also reported that Brexit was "dampening firms' recruitment intentions" and that this would put "increased pressure on UK employment levels".”

“Despite reports that firms such as Citi are planning to relocate to Dublin, permanent vacancies within financial services remain resilient. It seems that the recent frenzy of temporary hiring, which created a boom in demand for contractors, has now subsided and this has been replaced with more stable hiring activity.”

Source: APSCo