Recession fears force UK businesses to park hiring plans
Recession fears are forcing businesses to mothball hiring plans to keep costs at a minimum, a new survey out today reveals.
KPMG and the Recruitment and Employment Confederation’s (REC) permanent hiring index stumbled to 44.5 in December from 46.4 in the previous month.
The reading has now been below the 50 point mark that separates growth and contraction, indicating the UK jobs market’s surprise resilience to the economic slowdown has been breached.
Official unemployment figures have held at multi-decade lows for months and vacancies have stayed around record levels despite experts warning the UK is on course for an at least year long recession.
However, KPMG and the REC’s figures reinforce purchasing managers’ indexes (PMI) out last week that indicated businesses are considering shedding workers or reining in recruitment drives in response to the darkening economic outlook.
“The challenging economic environment continues to constrain the jobs market,” Claire Warnes, Head of Education, Skills and Productivity at KPMG UK, said.
Full-time hiring is tanking
London’s jobs market is the best performing in the UK and is actually on the mend, boosted by strong demand for financial services workers.
Nonetheless, despite a rise to 46.6 from 44.4, permanent hires are shrinking in the capital.
Permanent hires do tend to soften in December, while temporary billings receive a boost due to the busy Christmas shopping period. Part-time actually expanded in December, with the index hitting 51.6.
Pay is rising far above its long-term trend, but growth is cooling, KPMG and the REC found, with the pair’s full-time wage index hitting 61.9, down slightly from 62. Part-time pay is also rising, albeit at a slower pace.
Despite accelerating pay, inflation is eroding households’ spending power. The Resolution Foundation warned yesterday that real incomes will still be below pre-pandemic levels in 2028.