The Recruitment and Employment Confederation (REC) and KPMG Report on Jobs – published 07th Feb – provides the most comprehensive guide to the UK labour market, drawing on original survey data provided by recruitment consultancies.

Further sharp rises in permanent placements and temp billings

Permanent staff placements continued to increase strongly in January, although the pace of expansion eased from the 45-month high recorded in December. Similarly, temp billings rose at a rate only marginally slower than December’s 15-year peak.

Strongest growth of demand for staff since May 1998

Overall job vacancies rose at a sharp and accelerated rate in January. The pace of expansion was the fastest in over fifteen-and-a-half years.

Permanent salaries continue to increase markedly…

The rate of growth of permanent staff salaries remained elevated at the start of 2014, holding at a pace broadly in line with December’s six-year peak.

…amid declining availability of candidates

Further falls in staff availability were signalled in January. Both permanent and temporary candidate numbers declined at marked rates, albeit the slowest in three months.

Regional and sector variation

Marked increases in permanent placements were signalled in all four monitored English regions, with the South posting the steepest rise.

Growth of temp billings was signalled in each of the English regions during January. The strongest rate of expansion was indicated in the North, followed by the Midlands.

Demand for staff rose in both the public and private sectors during January, with the latter registering the faster growth.

In both sectors, permanent staff saw a stronger improvement in demand for their services than temporary workers.

Engineering remained the most in-demand category for permanent staff in January, closely followed by Construction. Rates of growth were marked elsewhere and in all cases faster than long-run series averages.

Demand rose for all nine types of temporary/contract staff in January. As was the case for permanent employees, the strongest rate of expansion was indicated for Engineering workers. The slowest growth was signalled in the Construction category.

The REC’s Tom Hadley said: “The squeeze on people’s finances continues to dominate the news but this month’s data shows there is hope for workers. All regions around the country are seeing permanent starting salaries and hourly pay rates continue to grow driven by skills shortages across an ever growing range of sectors.”

“Britain’s building boom and major infrastructure projects have seen demand for permanent construction and engineering workers soar this month – however recruiters are struggling to source skilled people to satisfy this demand.

“The report shows many of the latest in-demand roles are being sought by employers looking to invest in staff to build their businesses including customer services, marketing and sales roles, although there are skills shortages across all sectors. This again underlines just how critical the issue of skills shortages is becoming, as businesses will not be able to contribute to economic growth if they cannot find the skilled workers they need. Part of the solution is to develop a careers guidance network that is fit for purpose and raises awareness of growth sectors and current and future skills needs.”

Bernard Brown, Partner and Head of Business Services at KPMG, comments: “Employer confidence continues to grow, with the thirst for new staff hitting a fifteen-and-a-half year high in January.  In a week showing improvements to UK construction figures and growth across the Eurozone manufacturing industry, it shouldn’t come as a surprise if other sectors begin to report peaks in performance.

“Yet no one should be fooled into thinking that the road ahead will be easy to travel.  Earlier this week markets across the globe fell as investors were rattled by weak data.  It’s unlikely to herald a crisis, but should serve to ensure employers remain vigilant to business threats.

“The warning has been noted by employees because, although jobs are being created, January saw another decline in the number of people putting themselves on the jobs market.  The preference seems to be for temporary roles, suggesting that employees are adopting a ‘try before you buy’ mentality before committing to long-term roles.”