Job market decline smallest in 13 months

LONDON (Reuters) - The pace of decline in the job market continued to ease in June, with permanent placements falling at their slowest rate in more than a year, a survey showed on Wednesday.

The KPMG/Recruitment and Employment Confederation Report on Jobs showed a reading of 48.6 in June for permanent placements, up from 41.7 in May and the highest in 13 months.

That was the biggest monthly rise in the index since the survey began in October 1997, although it was still below the 50-level separating growth from contraction.

The index gauging placements of temporary staff rose 4.8 points to 44.9 in June -- also a record jump and indicating the slowest pace of decline since September.

But the survey's sponsors warned it was too early to talk of a recovery in the jobs market and noted that one reason for the improvement could be that firms were asking staff to work shorter hours for less pay to safeguard their jobs.

"This approach may have played a part in moderating the impact on employment during the current recession," said Mike Stevens, head of business services at KPMG.

Most economists still think unemployment will keep rising this year to top 3 million by 2010, taking the jobless rate to around 10 percent as the recession drags on.

Wednesday's survey showed salaries for permanent staff fell at their slowest rate in six months, with a reading of 41.8 versus 40.7 in May, and the decline in temporary pay eased modestly to 40.9 from 40.6.

The staff vacancies index rose to 39.2 from 34.4 -- the biggest improvement since November 1997. Vacancies for permanent and temporary staff fell at their slowest pace in nine and eight months respectively.