Rise in job candidate availability at the quickest pace in more than four and a half years, coinciding with another slowdown in hiring activities
## UK Job Market Trends: A Deteriorating Picture (KPMG & REC June 2022)
The latest findings from the KPMG and REC UK Report on Jobs, covering June 2022, paint a grim picture of the UK's job market. The report reveals a significant slowdown in hiring activity, falling vacancies, and a surplus of job seekers.
## Key Findings from June 2022
**Persistent Hiring Slowdown** - Permanent staff appointments decreased at a faster pace in June compared to May, reflecting shrinking hiring confidence among employers. - Permanent job placements have now declined for 13 consecutive months, marking a prolonged downturn. - Vacancies have been steadily declining, hitting a three-year low—down 12% year-on-year, and now about 700,000, well below pre-pandemic levels.
**Loosening Labour Supply** - The labour slack index hit 64.2 in June, its highest since November 2020, signaling clear loosening in hiring dynamics. - Candidate supply expanded at the fastest pace since November 2020, with both permanent and temporary candidate numbers rising sharply. - The unemployment rate has ticked up to ~4.4%, the highest in nearly four years, with approximately 1.6 million people now unemployed.
**Wages and Compensation** - Pay growth has stagnated due to lower demand for workers and tighter client budgets; starting salaries and temp wages increased only modestly, with inflation in wages notably weaker than historical trends.
**Sectoral and Regional Patterns** - The sharpest declines in permanent vacancies were seen in the **Retail**, **Nursing/Medical/Care**, and **Hotel & Catering** sectors. - **Retail sector vacancies have collapsed**, with entry-level roles—especially for graduates—plummeting by about one-third compared to two years ago. - **All four monitored English regions** reported falls in permanent staff appointments, with the steepest downturn in the South of England.
## Drivers of Market Weakness
**Economic Pressures** - Employers face higher business costs (e.g., employer National Insurance, higher minimum wages), high interest rates, and global uncertainty from trade tensions and geopolitical instability, which have dampened both investment and hiring. - The Bank of England notes that UK GDP growth remains weak, and the labour market continues to loosen, with “clearer signs that a margin of slack has developed.”
**Technological Disruption** - Major firms are cutting staff as automation and AI expand, particularly affecting desk-based and entry-level jobs.
## Outlook and Implications
- Businesses remain cautious, awaiting clearer signs of market stability before committing to significant hiring or spending. - The gradual improvement in employment numbers seen earlier in the year has stalled, and hopes for a better second half of 2022 are tempered by persistent weakness. - These trends are influencing monetary policy (potential for earlier rate cuts) and are reshaping opportunities and risks in UK equity markets, particularly in rate-sensitive and labor-intensive sectors.
## Summary Table
| Trend | June 2022 Status | Notes | |-----------------------------|-------------------------------|----------------------------------------| | Permanent hires | Sharpest fall in 13 months | 13-month decline; weakest since GFC | | Vacancies | 700,000 (lowest in 3 years) | 12% annual drop; below pre-pandemic | | Candidate supply | Fastest growth since 2020 | Labour slack index highest since 2020 | | Unemployment | ~4.4% (highest in 4 years) | 1.6 million unemployed | | Wage growth | Stagnant, modest increases | Weaker than historical trends | | Worst-hit sectors | Care, hospitality, retail | Entry-level roles especially affected | | Automation impact | Increasing | Major firms trimming staff | | Regional differences | All regions down, South worst | |
## Conclusion
The UK job market is experiencing a pronounced and sustained cooling, characterized by falling vacancies, rising unemployment, slowing pay growth, and rapid increases in candidate availability. Employers are cautious amid high costs, economic uncertainty, and technological disruption, and sectors reliant on entry-level or manual labour are feeling the greatest pressure. No immediate reversal is expected, with businesses awaiting clearer signs of economic stability before resuming more robust hiring.
The latest KPMG and REC UK Report on Jobs for June 2022 indicates a correlation between the slowdown in hiring activity and the business sector, as permanent staff appointments decreased at a faster pace, and vacancies have been declining, particularly in sectors like Retail, Nursing/Medical/Care, and Hotel & Catering.
Furthermore, the report demonstrates that the current economy is affecting the financing aspects of businesses, as employers face higher costs such as employer National Insurance and higher minimum wages, which have contributed to the shrinking hiring confidence and the prolonged downturn in permanent job placements.
