UK businesses taking on fewer permanent employees

Fewer people in the UK secured a permanent job in July, for the second month in a row.

According to the latest Markit/REC Report on Jobs released on Friday, there was a marked drop in permanent appointments, particularly in London.

The Recruitment and Employment Confederation (REC), which sponsors the monthly survey, noted that the rate of contraction was the fastest seen since May 2009.

Temporary/contract staff appointments continued to rise in July, with some recruitment firms indicating that clients had shifted focus towards short-term staff amid an uncertain economic climate. However, the latest increase was the weakest in ten months.

Starting salaries for successful permanent candidates increased further in July, although the rate of growth eased to a 38-month low, the REC reported. For temporary/contract staff, pay rose at the slowest rate since February.

Commenting on the July report, REC chief executive Kevin Green said:

?The UK jobs market suffered a dramatic freefall in July, with permanent hiring dropping to levels not seen since the recession of 2009. Demand for staff remains strong with vacancies continuing to rise, but the sharp fall in placements suggests that businesses are highly cautious about committing to new hires. Economic turbulence following the vote to leave the EU is undoubtedly the root cause.?

Green also noted, however, that it is too early to draw conclusions about the longer term impact of Brexit on employment.

?While there are worrying signs, it?s important we don?t jump to conclusions from one month?s data,? he said. ?The truth is we don?t know what long term consequences the referendum result will have on UK jobs; with the political situation becoming more stable and the Bank of England making sensible decisions, we may well see confidence return to the jobs market more quickly than anticipated.?

On Thursday the Governor of the Bank of England, Mark Carney, forecast that unemployment in the UK will rise from 4.9% to 5.5% over the next two years.