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Job vacancies fall for first time since 2003

08/07/2008

Demand for permanent staff fell for the first time in five years – as the UK economy weakens.

The KPMG and Recruitment and Employment Confederation (REC) June report shows a fall in the number permanent job vacancies for the first time since 2003.

Permanent staff placements fell at the greatest rate in over five years and the fourth time in five years.

Instability in the economy also saw temporary and contract staff levels rise – but at the slowest pace since January.

lan Nolan, director at KPMG, said: “This really is a sobering set of figures proving the credit crunch has finally taken its toll and is now severely weakening the UK jobs market.

"Many employers now seem to be accepting the inevitable - they will have to cut costs by laying off people because their businesses won't be growing as much as they could have expected a couple of months ago."

REC chief executive Kevin Green said: "This is the first major sign that a slowing economy is starting to have an impact on jobs."

However, he affirmed they were still jobs out there.

"It’s also vital that jobseekers keep in mind that there are still numerous positions to fill and recruitment agencies will be working hard to search for the right talent to meet employers’ needs," Mr Green said.

Commenting on the figures, Howard Archer at Global Insight said: "Unemployment is a lagging indicator, and there is mounting evidence that the labour market is now softening appreciably as markedly weaker growth and deteriorating business confidence impact.

"It seems inevitable that very weak economic activity and deteriorating business confidence will exact an increasing toll on the labour market over the coming months."

He added rising unemployment would add to the already serious pressures facing the consumer and increase the likelihood that consumer spending would be muted for an extended period.

"Furthermore, if unemployment starts to rise sharply, it will increase the danger of an extended sharp housing market correction occurring as it will likely lead to more houses coming on the market as people have to sell for 'distressed reasons'," Mr Archer concluded.