Business

Brexit hit recruitment in July, a new survey suggests

Person signing a contract for employment Image copyright Getty Images
Image caption Fewer people in the UK are securing permanent work

The number of people in the UK securing a permanent job has fallen for two months in a row, according to a survey.

The Report on Jobs, produced monthly by IHS Markit, collects data from 400 UK recruitment and employment firms.

Its data suggests permanent placements in July fell at the sharpest rate since May 2009, with participants citing uncertainty caused by Brexit.

The results also indicated that some clients of recruitment firms had shifted towards using short-term staff.

"The UK jobs market suffered a dramatic freefall in July, with permanent hiring dropping to levels not seen since the recession of 2009," said Kevin Green, the chief executive of the Recruitment and Employment Confederation (REC), which sponsors the survey.

However, Mr Green said it was important not to jump to conclusions from one month's data.

"The truth is we don't know what long term consequences the referendum result will have on UK jobs. With the political situation becoming more stable and the Bank of England making sensible decisions, we may well see confidence return to the jobs market more quickly than anticipated," he said.

Image copyright Getty Images
Image caption The new survey showed more spending on temporary staff in July

'Highly cautious'

Of the recruitment consultants polled, nearly 38% said they had placed fewer people in permanent positions in July, an increase from 32% in June.

Despite this, the survey found that demand for employees was high in many sectors and starting salaries for both permanent and temporary staff increased in July.

Nursing and medical care was the most in-demand category for permanent staff during July. Construction workers saw a decline in demand for their services.

"Demand for staff remains strong with vacancies continuing to rise, but the sharp fall in placements suggests that businesses are highly cautious about committing to new hires," said Mr Green.

"Economic turbulence following the vote to leave the EU is undoubtedly the root cause."

The survey comes a day after Governor of the Bank of England, Mark Carney, said unemployment in the UK was expected to rise to 5.5% over the next two years. It is currently 4.9%.

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