Permanent and temporary placements continued to decrease in July, according to the latest Recruitment & Employment Confederation (REC)/KPMG Report on Jobs. However, the rate of decrease eased for both categories of staff.

Temporary staff billings decreased for the eighth month running, while the number of people placed into permanent jobs fell for the second month running. Growth in demand for staff slipped to a six-month low in July, with the Report on Jobs Index dropping to 52.8 from 53.1 in June.

Demand for staff in the public sector continued to fall, with a sharper drop for permanent than for temporary staff.

Commenting on the latest survey results, Kevin Green, REC chief executive, says: "The UK’s labour market deserves a gold medal for its incredible performance in the face of adversity so far this year. In the last few months, it has defied gravity as unemployment has fallen and jobs grew even while the economy slipped back into recession.

“But this run might be coming to an end as this month’s data shows that permanent appointments have fallen for a second month and temporary employment has seen an eighth consecutive month of contraction. However, we have always said that we expected to see ups and downs in the employment figures rather than a continued sustained period of jobs growth. 

“What must be emphasised, though, is that employers are still hiring. In fact, the number of vacancies has grown, but fragile confidence means they are taking longer to make decisions about appointments and the whole process of recruiting is slowing down." 

 Bernard Brown, partner and head of business services at KPMG, says: “Only a few weeks ago there was an audible sigh of relief across the UK’s workforce as official employment figures indicated signs of improvement. 

“However, my concern is that any sigh of relief may be mistaken for a groan of exasperation, because the rate at which employers are recruiting has decreased for the second consecutive month, and this suggests that there is still a high degree of uncertainty. It is also likely that the ‘Olympic effect’ is combining with the traditionally quiet summer period for job hunters. 

“After so much debate surrounding employment prospects across public services there is, at least, some good news with higher demand across private businesses offsetting the slowdown in public sector recruitment.”

Despite the general deterioration in the jobs market, recruitment agencies continued to report skill shortages in some areas, including accountancy/financial, engineering/construction, IT and medical.