By Daniel Hunter

The Recruitment and Employment Confederation and KPMG LLP's latest Report on Jobs has signalled another modest rise in permanent staff placements during May, but the rate of growth was the weakest in the current five-month period of expansion.

Temporary/contract staff billings decreased for the sixth month running, and at the fastest pace since July 2009.

Vacancy growth weakens

Overall demand for staff rose at the slowest rate in four months during May. Weaker increases in vacancies were signalled for both permanent and temporary/contract workers.

Pay pressures remain muted

Permanent staff salaries rose at the fastest rate for eight months in May, but the increase was only modest and well below the long-run series average. Temporary/contract staff pay rose at the weakest rate in five months.

Regional and sector variation

The Midlands remained the strongest performer across the English regions in terms of both permanent and temporary jobs during May, while London continued to underperform.

By sector, demand for staff was reported to have risen at the fastest rates for IT and Engineering/Construction staff.

“This month’s data shows employers are becoming more cautious about hiring and while there is still growth in permanent placements, the figures have been getting weaker over the last two months," Kevin Green, Chief Executive of the Recruitment & Employment Confederation, said.

"Clearly the economic backdrop and the eurozone crisis are making some employers think twice before taking on new staff.

“What’s interesting are the niche areas that are seeing much stronger growth than the national average. In every month this year, the engineering and IT and computing sectors have seen solid increases in the number of workers recruited for permanent roles. And compared to other parts of the country, employers in the Midlands are confident about hiring more temporary and permanent employees.

“The temporary staff market has been contracting for the last six months, however, it's important to note that there are still over a million people per week working flexibly. Employers value the ability to flex their staffing costs based on current and future demand. In temp work too there are certain skills that are still in high demand — such as drivers, chefs and a whole range of IT expertise.

“Looking ahead, it’s likely that unemployment figures will rise over the next few months as another wave of young people leave education. We have a weakening jobs market which will only improve once demand returns to the economy. More jobs being created in the private sector in 2012 is vital for our overall economic recovery so anything which boosts confidence is good news — the jubilee and the Olympics may yet help us turn the corner.”

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