The number of people placed in permanent jobs during January has rebounded, according to the latest data from the Royal Bank of Scotland.
At 54.7, the seasonally-adjusted Permanent Placements Index rose from 46.8 in December to post above the neutral 50 threshold and signal an upturn in permanent staff hires for the first time in four months.
According to surveyed Scottish recruiters, improved demand for permanent staff and new projects supported the upturn at the start of the year. However, a sharp and accelerated fall in temporary billings was also recorded in January.
Growth of permanent roles slipped to a two-year low, while demand for temp staff fell for the first time in 28 months. Nonetheless, pressures on pay remained strong as the cost-of-living crisis and skill shortages drove further increases in salaries and wages.
Following monthly contractions throughout the last quarter of 2022, the latest data pointed to a rebound in permanent staff appointments across Scotland in January. The respective seasonally adjusted index increased further from November's recent low, indicating a solid rate of growth that was broadly in line with the historical average. The fresh upturn in permanent staff hires was attributed to improved client demand and new projects.
Scotland went against the broader UK trend, which recorded a fourth successive monthly decline in permanent placements at the start of 2023.
Temp billings fell across the Scottish private sector again in January, thereby extending the current sequence of reduction to four months.
The rate of decline quickened markedly from the preceding survey period and was the fastest since June 2020. Recruiters linked the downturn to relatively subdued market conditions and weaker-than-expected activity levels at clients.
Permanent staff availability fell in January, extending the trend which has been observed since February 2021. Recruiters indicated that uncertainty around the outlook and the cost-of-living crisis had damped staff availability.
However, while the rate of decline was marked overall and faster than the historical average, the seasonally adjusted index did improve to a 22-month high.
Scottish recruiters registered a fall in temp staff supply for the twenty-third month running in January. Greater availability and interest in permanent roles was linked to the reduction in the supply of temp workers.
Permanent starting salaries in Scotland continued to rise sharply in January. Though the respective seasonally adjusted index ticked down from December's six-month high, the latest reading was comfortably above the survey average and signalled a much faster upturn than the UK average.
Candidate shortages and increased living costs were the main drivers of pay growth in the latest survey, according to recruiters.
January data revealed an accelerated rise in average hourly pay rates for temporary staff in Scotland. Temp wages rose markedly and at the second-fastest pace on record with recruiters linking the latest rise to the cost-of-living crisis and skill shortages.
Demand for permanent staff rose across Scotland in January, thereby extending the current sequence of increase to two years. However, the upturn in demand continued to weaken from the near-record pace registered last April and was weaker than the historical average.
Of the eight monitored sectors, demand for permanent staff was strongest for nursing, medical and care, with IT and computing coming in second.
The latest data for Scotland revealed the first fall in temp vacancies in 28 months during January. The pace of contraction was modest overall, but contrasted with a strong upturn across the UK as a whole.
Sebastian Burnside, chief economist at RBS, commented: ”While firms have been successful in securing new permanent starters in January, total demand for permanent staff moderated further, with vacancies rising at the softest pace in nearly two years.
”At the same time, demand for temporary workers fell for the first time in 28 months - the data indicates a shift in the market with a preference for permanent staff.
”However, lingering concerns over the economic outlook and intense cost pressures at firms indicate that recruitment decisions may be under more pressure in the months ahead.”
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