Professional recruitment firms reported that vacancy numbers remained stable in the month following the EU Referendum with 0.2 percent year-on-year growth in July 2016 according to new survey data from the Association of Professional Staffing Companies (APSCo).
This is in line with the latest data from the Office for National Statistics (ONS), which reported in August that the overall employment rate was 74.5 percent in the three months to June 2016 – with 23.22 million people working full-time, 374,000 more than a year earlier. The latest data from APSCo reveals notable variations between the trade association’s core sector groups in terms of hiring activity. While permanent vacancies across both financial services and marketing, for example, have increased (6 percent and 16 percent respectively), IT and engineering have both recorded dips (7 percent and 9 percent respectively).
Contract vacancies within financial services jump 21 percent
Following a steady increase in demand pre-Brexit, temporary and contract vacancies dipped across the professional staffing market in July, with opportunities softening by 2 percent year-on-year. The clear exception is the finance and accounting sector where vacancies increased by 21 percent in July. Most likely due to a reluctance to bring on board talent on a permanent basis until there is greater clarity around what Britain’s relationship with Europe will look like post Article 50 – and how this will impact the operations of multi-national financial institutions moving forwards.
Engineering vacancies dip
Permanent vacancies within the engineering sector dipped by 9 percent year-on-year in July. This is in line with recent reports from the CBI which found that the UK’s manufacturing output eased back in the three months to August with 34 percent of businesses reporting a rise in output and 23 percent reporting a fall. This represents a balance of +11 percent, which is down from +16 percent reported in July. This fall in confidence may be in response to anticipation of a post-Brexit funding gap, with a large proportion of research and development spend in the sector currently coming from the EU. However, this dip in demand is juxtaposed with a simultaneous increase in average salaries with both manufacturing and engineering recording uplifts of 3.4 percent and 2.3 percent as ongoing skills gaps, created by a steep retirement cliff, continue to impact the supply of professional talent.
Average salaries dip
APSCo’s figures also reveal that median salaries across all professional sectors dipped by 0.8 percent year-on-year. This figure is characterised by notable fluctuations in terms of sector, with financial services, for example, recording an uplift of 3.6 percent. Average salaries within the professional sectors fall short of the national increase in pay as reported by the ONS which found that average earnings grew at an annual rate of 2.3 percent in the three months to June 2016. Ann Swain, Chief Executive of APSCo comments: “Pre-Brexit, it was widely hypothesised that market confidence and the UK economy would spin into freefall if Britain was to leave the European Union. However, so far, these fears have proved unfounded. Data shows that both retail sales and the labour market performed strongly in July and August’s Purchasing Managers’ Index (PMI) reported that Eurozone activity was at its highest for seven months.”
“It is interesting that demand for contractors within financial services remains strong despite widespread volatility in the sector. Lloyds Banking Group, for example, said in July it would axe 3,000 jobs and close 200 branches to cushion against a more testing economic environment caused by Britain’s vote to quit the EU. Similarly, European banks including HSBC and Deutsche Bank have also gone on record to say they may have to move people or activities to France and Germany if rules around passporting rights change post Article 50. It seems that an increasingly flexible workforce is being utilised to keep the wheels in motion until there is greater certainty around what the UK’s future relationship with the EU will look like. Until then, the professional recruitment sector will continue to provide talent to firms’ immediate and short-term needs.”
Adam Pode, Director of Research for Staffing Industry Analysts, which compiles the report for APSCo, comments: “The drop in the demand in the engineering sector comes as no surprise. The oil industry, which makes up an important part of the sector has seen revenues tumbled 96 percent from 2014-15 to just £60m in 2015-16, according to Government figures. Last year the number of jobs supported by the UK’s oil and gas industry fell by an estimated 84,000 and are forecast to fall by a further 40,000 this year. Separately concerns about commercial construction are also having a negative impact.”