September 3, 2008 / 4:24 AM / 12 years ago

Permanent job placements fall sharply

City workers walk past the Bank of England in central London November 9, 2007. REUTERS/Alessia Pierdomenico

LONDON (Reuters) - The number of people placed in permanent jobs by recruitment agencies fell at its sharpest pace last month since November 2001, a survey showed on Wednesday.

The KPMG/REC Report on Jobs also showed salaries grew at their weakest rate in five years — which should allay Bank of England fears that high inflation now is forcing wages higher.

The permanent placements index fell to 41.5 in August from 44.1 in July. That was the weakest in 81 months. The number of people placed into temporary jobs also fell for the first time since May 2003, with the index slipping to a series-low of 46.4 from 50.7.

Any reading below 50 indicates a contraction.

The permanent vacancies index fell to 44.9 from 46.2, the fastest pace in 80 months, while the temporary vacancies index fell again to 47.7 from 49.2, only the second time it has signalled contraction in the survey’s history.

The permanent salaries index fell to 50.3 while the temporary pay index fell to 50.9 from 51.1.

The report comes after staffing firm Hays posted better-than-expected annual profit on Tuesday but warned it would have to cut jobs of its own due to falling demand for permanent hires in Britain and Australia.

Hays, which generates most of its fees from the UK and Ireland, said that while it had made a strong start to fiscal 2008, demand for both temporary and permanent placements slowed markedly in the six months to June, which would mean cutting jobs and costs.

“UK demand for permanent placements is falling - as is Australia - and temporary has dropped off to a flat position so we need to reduce costs further, which will have an impact on our overall UK headcount,” chief executive Alistair Cox told reporters on a conference call.

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