The latest REC/KPMG Report on Jobs reveals that the strong growth in demand for temporary/contracting and permanent staff recorded in September continued into October, although at a slightly easier pace.

Higher vacancy levels arose in both public and private sectors, with overall demand for staff hitting its fastest rate of expansion since June 2007. The growth in demand for temporary/contracting staff slowed very slightly in the private sector, but increased in the public sector; the inverse was true for permanent staff.

Pay rates for temporary/contracting staff also rose in October, but at the slowest rate in four months, while permanent salaries accelerated at their fastest rate since December 2007. Demand for both categories of staff, however, grew across all nine of the job categories monitored by the survey, with core contracting disciplines – engineering, construction, and IT & computing – seeing the strongest increases. Professional and executive roles, by contrast, grew at the slowest pace.

October also saw the sharpest decline in the availability of suitably skilled candidates in six years – a shortage that was true of both permanent and temporary/contracting categories.

The REC’s CEO, Kevin Green, welcomed another month of growth for both temporary and permanent jobs across all job sectors and all regions; however, he warned that the skills shortage “shows no sign of abating” and, while it may drive pay rates up in the short term, “there is a real danger that it could cause serious damage to future economic growth in the UK.”

KPMG partner and head of business services, Bernard Brown, also warned that, if left unchecked, “wage inflation will bring different challenges to businesses who strive for profitable growth.”

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