The latest REC/KPMG Report on Jobs brings disheartening news to many PAYE umbrella contractors on the hunt for new placements, as appointments for both temporary and permanent staff fell during June at the sharpest rate for three years.

The availability of candidates rose during the month and pay rates stagnated. Permanent candidates specialising in the IT skills market, engineering, and construction, however, enjoyed a much better month than just about every other sector, with demand in each topping the poll. Demand for temporary personnel was strongest in nursing, medical and care sectors.

There were regional variations in the overall picture, with the Midlands, the North and even London recording lower placement volumes in June than in May. Only the South managed to swim against the tide and post growth, but in all English regions bar one, demand for temporary workers plunged. The Midlands was alone in posting solid growth for temps.

Acknowledging that the sharp fall in appointments was “really disappointing,” the REC’s chief executive, Kevin Green, commented:

“The UK labour market has been remarkably resilient throughout the downturn and our slow economic recovery; however, employer confidence is fragile and it’s not that surprising that under the weight of the eurozone crisis and other bad news placements fell in June.”

“I expect as we continue to make slow progress out of recession that we’ll see this kind of a zigzag pattern with some good months followed by weaker ones – rather than sustained periods of uninterrupted jobs growth,” he continued.

Recruiter feedback to the REC, however, suggests that employers are still hiring, but their increased caution is leading them to take longer to make decisions and confirm hires.

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