By Daniel Hunter

Growth of permanent staff placements was recorded for the second month running in February and at the strongest pace since last May according to the REC/KPMG Report on Jobs published today (Wednesday).

Agencies’ temporary/contract staff billings, however, fell slightly for the third month running.

Key points of the Report are:

- Stronger rise in permanent placements but temp billings fall
- IT & Computing and Engineering/Construction staff most in-demand
- Permanent salaries fall for first time since October 2009
- Temp pay rises at fastest rate in four months

Overall demand for staff rose at the fastest pace in four months during February, as a sharper increase in permanent vacancies offset a slower expansion of temp vacancies. Sector data showed that IT & Computing was the most in-demand permanent staff type, while Engineering/Construction was the most sought-after temp category.

The availability of candidates to fill job vacancies rose further in February, albeit at a weaker pace. For both permanent and temporary staff, rates of growth were the slowest in three months.

Recruitment consultants reported a drop in permanent staff salaries during February for the first time since October 2009. In contrast, temp staff pay rates increased at the fastest pace in four months.

“The labour market is clearly improving as this month’s Report on Jobs shows the strongest performance on permanent placements for nine months," Kevin Green, Chief Executive of the REC, said.

"Demand for staff also rose at the fastest pace for four months, so jobseekers should take heart that there are vacancies out there. Slowly, private sector employers are becoming more confident as the gloom, caused by a slowing economy late last year and fears about the Eurozone, recedes.

“The temporary market has shown a slight decline since January and is essentially flat at present. However, agency work continues to provide an important outlet for employers and jobseekers with over a million temporary workers placed on assignments in any given week.

“We are seeing high demand in professional roles such as IT, engineering, legal and HR and chefs continue to be in demand within the hospitality sector. The other sector which seems buoyant is nursing, medical and care. We believe this is because NHS trusts are recognising that using high quality temporary staff when they are needed is a cost effective solution to maintaining a quality service when budgets are being squeezed.

“Looking ahead, we anticipate that unemployment will continue to worsen slightly over the next few months. However, with these early indicators of the private sector starting to hire again, the labour market is likely to bounce back towards the end of this year and on into early 2013.”

Bernard Brown, Partner and Head of Business Services at KPMG said the latest reports lifts spirits in the job market.

“The latest report raises hopes of a Spring revival in the jobs market with a second successive monthly rise in the number of people securing permanent roles and the data also indicating that February saw the rate of growth accelerating to a nine-month high," he said.

"Put alongside recent news from the ONS which suggested that the last unemployment figures represented the smallest rise in almost a year and there may be signs that the market is displaying early signs of recovery.

“Yet cautious optimism must remain the watchwords because the picture is not as rosy for temporary positions. Of course, the reduction in contract placements may yet be related to the Agency Workers regulations, but without buoyancy in both the permanent and temporary markets it is still too early to unfurl the bunting.

“For those who have found new employment, we are also seeing rates for wages reducing for the first time since 2009, with a real prospect of continued downward pressure as the year goes on. Given the ongoing squeeze many are feeling as costs go up on the high street, it appears that the price of permanent employment is lower take-home pay, but this is an inevitable consequence of a competitive, yet still fractious, market.”

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