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Langley James IT Recruitment Market Review – London – May 2019

June 10, 2019 . 10:00 am

Key points from May survey:
– Demand for permanent workers worsens further…
– …curbing starting pay inflation
– Permanent staff appointments contract solidly

Commenting on the latest survey results, James Stewart, Vice Chair at KPMG, said:
“Brexit uncertainty continues to dampen the UK jobs market as companies kept their recruitment decisions on hold in May. Permanent staff appointments fell at a slightly faster pace than in April, while subdued confidence ensured that growth in temporary billings hit a six-year low.
“Of increasing concern is that uncertainty is feeding through to weaker growth in job vacancies, while the supply of candidates fell sharply as people are becoming more risk averse with regards to switching roles. Relatively muted trends for permanent staff vacancies were seen across the board, with retail, construction and executive/professional hit particularly badly.
“We expect the labour market to remain in stalemate over the summer as the contest for a new Prime Minister kicks off. Companies are unlikely to make any dramatic investment decisions until a new leader is in place and have more insight on the future direction of Brexit.”

Neil Carberry, Chief Executive at the REC, said:
“The jobs market is still creating opportunities for those looking for work. With total vacancies rising and starting salaries going up sharply, it is worth people talking to recruiters about that next step in their career.
“Overall, though, the survey again shows what uncertainty does to hiring plans, with permanent placements dropping again.”

Staff Appointments

Permanent appointments fall for third straight month
May data highlighted a third consecutive decline in permanent staff placements in the capital. According to recruitment consultants, challenging market conditions, reduced client activity and lower demand for staff all contributed to the latest drop. Despite easing from April, the pace of contraction remained solid and quicker than at the UK level.
Growth of contract billings sustained
Contract billings continued to increase in London, stretching the current period of expansion to four months. Moreover, the upturn was solid and the strongest since February. Anecdotal evidence highlighted a preference for contract workers among clients, linked in part to lower permanent candidate availability.

Job Vacancies
Permanent job vacancies in London decreased for the second straight month in May, with the contraction broadly similar to April. Notably, the fall was the only seen regionally as growth was sustained elsewhere. Contract vacancies in the capital continued to rise, though the pace of growth eased to the weakest in the current 79-month period of expansion.

Staff Availability
Steeper fall in permanent staff availability
Recruiters continued to signal shortages of candidates for permanent roles in London. Moreover, the contraction noted in May was sharp and accelerated from April. According to panellists, existing workers were reluctant to switch jobs amid lingering Brexit uncertainty. There were also reports of fewer EU jobseekers and tight labour market conditions.
Contract staff supply declines further
The availability of people willing to undertake contract jobs in London deteriorated again in May, with around one-third of panellists signalling a reduction. Furthermore, the pace of contraction was marked and the fastest since February. Anecdotal evidence pointed to shortages of foreign language speakers, engineers, chefs and IT staff.

Pay Pressures

Starting pay inflation slides to 29-month low
Permanent starting salaries in London continued to rise, but the rate of inflation moderated considerably during May. In fact, the latest increase was the weakest registered since December 2016, and the slowest noted across the four monitored English regions.
Contract pay growth hits eight-month high
Ongoing growth of demand for contract workers, coupled with candidate shortages, continued to push up rates of pay in London. The overall rate of wage inflation was sharp and the strongest since last September, though broadly in line with the UK average. The increase in the capital was the second-fastest of the four tracked English regions, behind the South.

Official Data: UK Average Weekly Earnings
Latest data published by the Office for National Statistics indicated that average weekly earnings across the UK increased by 2.2% year-on-year over the first quarter of 2019. The upturn was led by the East Midlands, which saw pay increase 11.4% to £574. London was the only area to register lower pay compared to a year ago, with average weekly earnings falling by -2.3% to £762.

Regional Comparison

Staff appointments
Permanent staff placements across the UK fell for the third month in a row during May. The rate of decline accelerated slightly from April and was modest overall. The latest fall was driven by contractions in three of the four monitored English regions, led by the Midlands. The North of England was the only area to record an expansion in permanent staff appointments, registering a marked increase overall.
At the same time, contract billings continued to rise across the UK, extending the current sequence of expansion to just over six years. That said, the rate of growth eased to the slowest seen over this period and was marginal overall. At the regional level, increases in the South of England and London helped to offset declines in the North of England and the Midlands.
Candidate availability
As has been the case in each month for just over six years, UK permanent labour supply deteriorated in May. The rate of reduction was the quickest for four months, driven by sharper contractions in London and the Midlands. Nonetheless, there were also marked declines in permanent staff availability in both the North and South of England.
Contract staff availability also continued to fall midway through the second quarter. Moreover, the rate of decrease accelerated to the quickest since February and was historically marked. Recruiters noted sharp declines in each of the four monitored English regions, with the Midlands and London recording the steepest rates of contraction respectively.
Pay Pressures
Permanent starting salaries across the UK continued to increase in May, extending the current sequence of growth to just over seven years. The rate of inflation remained historically sharp, despite easing to the softest since April 2017. At the regional level, the steepest rise in permanent starting pay was registered in the North of England, while the weakest was seen in London.
Meanwhile, remuneration for contract staff across the UK rose at a faster pace than in April. The rate of inflation ticked up to the quickest for six months and was sharp overall. All four monitored English regions recorded faster increases in contract pay, bar the North of England.

About Langley James
Langley James was founded in 1999 by James Toovey, a highly respected recruitment industry professional.  James wanted to provide something unique: a bespoke recruitment service which was founded on service excellence.  With offices in London and Chester, we are now providing our recruitment services throughout the world and over the last 19 years have worked with some of the most respected companies.

The average time form taking a role…
– and Delivering a Qualified Shortlist of Candidates          3 days
– and First Confirmed Interview                                             5 days 
– and Confirmed Placement                                                     8 days

To find out why so many companies turn to Langley James for support in fulfilling their IT recruitment needs, call and speak to one of our specialist consultants today on 0207 788 6600.

In conjunction with: IHS Markit and sponsored by the Recruitment and Employment Confederation.