By Max Clarke

The new Report on Jobs published today by the REC and KPMG shows permanent staff placements and temporary staff billings both continued to rise in December, but the rates of growth were slightly weaker than the three-month highs recorded in November.

Public perception, however, does not reflect this growth, with 57% of the public percieving a worsening jobs market.

Key points highlighted in the Report are that:
• Growth in permanent placements remained solid despite easing slightly
• Stronger rise in demand for staff
• Permanent salaries increased at faster pace
• Improved availability of short-term staff dampened temp pay inflation

Demand for staff continued to rise at a solid pace in December. Permanent staff vacancies increased at the sharpest rate in four months while growth of temp vacancies accelerated to a six month high.

Although the availability of permanent staff increased for the third month running in December, the latest improvement was only marginal and the slowest in that sequence. Correspondingly, permanent staff salaries rose at a stronger rate as employers competed for skilled candidates.

Recruiters also reported a stronger improvement in the availability of candidates for temporary/contract jobs in December with growth the fastest in 13 months. This acted to constrain temp pay inflation which remained subdued.

Kevin Green, the REC's Chief Executive commented:
"While these figures continued to show private sector employment doing well, the next few months will be very tough for the jobs market in the UK. With public sector cuts, the VAT rise and slowing economic growth, we expect to see businesses being much more cautious about hiring in the short term.

"We are delighted that the Government is saying in intends to be pro business, pro growth and pro jobs. We will wait to see the proposals in full but addressing the issue of one million young people under 24 not in education nor employment is critical for the long term success of our economy and must be a priority for the Government in 2011."

Bernard Brown, Partner and Head of Business Services at KPMG commented:

"The latest data suggests again that the UK job market is on the road to recoery as growth of permanent placements remained solid and demand for staff rose strongly. A look at the sectors indicates that the private sector is mainly responsible for the overall positive picture with IT and computing as well as executive and professional staff most in demand.

"Whilst demand has been strong, we are entering a critical phase in the UK job market with two big question marks. First the impact of Government cutbacks in public sector spend and employment, which should start to bite over the coming months. Second, the impact of the recent VAT increase and whether this will affect UK consumer demand and job creation."