Market Report: Autumn jobs market will 'wait and see'

Employers have grown increasingly cautious when hiring new workers whilst the economic outlook remains uncertain, according to this month's pan-industry market report.

The Recruitment and Employment Confederation's (REC) Report on Jobs recorded a rise in permanent placements for the fifth successive month in July. However, it said the rate of growth had eased to a three-month low and remained far weaker than the downturn of mid-2000.

Meanwhile, contract worker billings rose for the seventh consecutive month in July, despite easing to a three-month low. The rate of growth of billings again exceeded that seen for permanent placements as clients maintained their preferences for flexible workers, according to the July REC Report on Jobs.

Demand rose at the fastest pace for 17 months in all main contract worker categories in July with the exception of the IT sector, which fell for the 17th successive month and at the fastest rate since March.

Demand in the IT sector was put at 47.6 per cent, ranking eighth out of eight sectors. Last July, IT ranked in bottom place at 39.2 per cent.

Holding out for growth

Demand for Engineering workers rose for the sixth consecutive month, with the rate of growth at the fastest since March 1998.

General availability of contractors increased for the fifteenth month running in July. Nevertheless, agencies continued to report certain key skills to be in short supply. The only key skill reported to be in shortage in the contract IT sector was 'Web Designers.'

Contract rates continued to rise modestly in July, but growth remained well below that seen prior to the slowdown of last year. Agencies attributed the weaker growth of rates to "an improvement in contractor availability in addition to pressure from client companies to reduce rates."

Agencies' margins on contract workers declined for the fifteenth month running as consultancies continued to cut their fees in the face of strong competition. Nevertheless, the rate of decline was well below REC's survey record pace seen in February and the weakest since September 2001.

Permanent salaries rose modestly in July (the seventh consecutive monthly rise). However, the rate of increase eased for the second month running following the recent high in May, dropping to the weakest level since March. Consultancies linked weaker growth of pay pressures to "a further marked rise in staff availability and slower growth of demand."

Availability of permanent workers rose for the fourteenth consecutive month with the rate of improvement picking up slightly for the second consecutive month, but remained well below the survey record pace set last December. Agencies generally attributed increased permanent staff availability to a greater number of redundancies during the month, particularly in the service sector.

Demand for permanent workers rose in most sectors, with the second sharpest rise being in the Engineering sector. The only exception was IT. Only 'Web Designers' were reported to be in short supply in this category.

Demand for Permanent Staff in the IT sector was recorded at 44.9 per cent. Last July it ranked one place up in seventh at 44.6 per cent.

Brett Walsh, Head of UK Human Capital at Deloitte & Touche, said: "The Report on Jobs provides the first hard evidence to suggest that overall employment levels fell in July as firms adopted a 'wait and see' approach to hiring new staff, and that pay pressures have eased further to show only very modest growth.

"Concerns over the strength of the recovery from last year's downturn, plus worries about the possible impact of recent equity market falls on business and consumer confidence, were all seen as factors encouraging firms to shed staff in order to cut costs rather than expand capacity."

Tim Nicholson, Chief Executive at REC, said: "This month's figures show the slowest rate of demand for permanent workers since March and must be taken seriously by policy makers. It is a further argument against increasing interest rates and adding extra regulatory burdens on business."

According to Jobstats, the average rates for IT workers are: £21 per hour for contractors and £37,200 per annum for employees.

(Note: Hourly rates refer to contractors, annual figures to permanent workers)

The five most popular skills are:

Management 30.1 per cent - £26 per hour, £41,700 per annum

Support 24.1 per cent - £16 per hour, £33,700 per annum

Analyst 18.1 per cent - £24 per hour, £36,300 per annum

Design 18 per cent - £30 per hour, £39,000 per annum

Finance 17.1 per cent - £32 per hour, £46,200 per annum

The five most popular locations are:

London 26.9 per cent - £26 per hour, £44,200 per annum

City 5.9 per cent - £31 per hour, £49,000 per annum

Berkshire 4.4 per cent - £18 per hour, £38,600 per annum

Surrey 3.9 per cent - £19 per hour, £36,700 per annum

Hampshire 3.3 per cent - £21 per hour, £35,700 per annum

The latest skills figures issued by TheSkillsMarket show:

The top five IT skills by supply:

Rank Skill Contract rate Perm rate1HTML£31.2027,4902UNIX£38.01£35,1943Windows NT£31.62£29,7934JAVA£35.70£31,1555MS Access£31.65£27,259

The top five IT skills by demand:

Rank Skill Contract rate Perm rate1JAVA£35.70£31,1552C++£35.08£31,2543UNIX£38.01£35,1944MS SQL Server£34.76£30,4205MS Visual Basic£34.76£30,420