Permanent placements in Scotland rise, but some concerns over falling vacancy growth, says RBS report

There has been a fresh expansion in permanent placements across Scotland at the start of the third quarter, but the decelerating growth of vacancies “does warrant some caution”, according to a new report from Royal Bank of Scotland (RBS).

RBS has found that the Scotland permanent placements index grew to 55.2 in July from 47.4 in June, with the fastest rate of expansion in 13 months. Picture: contributed.

The NatWest-owned lender’s latest Report on Jobs survey has revealed that the Scotland permanent placements index grew to 55.2 in July from 47.4 in June, the upturn marking the first rise since January amid reports of improved confidence at clients and business expansion plans, and the fastest rate of expansion in 13 months. Furthermore, the expansion in Scotland compared with a sharper drop at the UK level that was the quickest for just over three years.

The temp billings index north of the Border fell in July for the tenth month running to 48.8 (readings above 50 signal an increase or improvement; readings below 50 signal a decline or deterioration), and recruiters noted that delays in project start dates hindered hiring activity for such workers. However, the overall pace of reduction slowed to the joint-weakest in the aforementioned sequence, RBS added.

Turning to the availability of candidates to fill permanent positions across Scotland, this index deteriorated sharply last month, reaching 43.8, and stretching the current run of reduction to two-and-a-half years. The rate of decrease was the most pronounced in four months amid reports that people were more hesitant to seek new roles.

As for the supply of temporary staff north of the Border, this fell in July for the 29th successive month to settle at 49. Recruiters linked the drop to more people looking to stay in their current roles due to concerns over the outlook, as well as the broader issue of a general lack of suitably-skilled candidates, although the rate of contraction was the softest since March and marginal overall.

July data signalled a rise in salaries awarded to permanent new starters, with this index 61 for the month, while the rate of temp pay growth picked up from June’s 31-month low and was sharp overall, at 57.5, with the upturn in wages across Scotland outpacing that recorded for the UK as a whole.

Demand

Finally, demand for permanent staff in Scotland increased in July, with this index 51.2, although the rate of growth cooled to a 29-month low, while recruitment consultancies recorded a contraction in temp billings for the 10th successive month, with this metric 53.8. Both types of vacancy saw major demand from IT and computing.

RBS chief economist Sebastian Burnside said: “While the fresh expansion in permanent placements signals a positive sign for Scottish labour market conditions at the start of the second half of the year, the continued slowdown in the growth of vacancies does warrant some caution.

"Nonetheless, the rise in new permanent hires, following five consecutive months of decline, highlighted the return of confidence across businesses, and the successful filling of long-standing vacancies amid the ongoing deterioration in staff availability. In terms of salary and wage inflation, growth rates were sharp. The historically strong increases in starting pay were often linked to a lack of suitable candidates, therefore businesses were keen to offer higher pay to secure talent.”