The start of the second quarter saw a further marked increase in hiring activity across Scotland, according to the latest Royal Bank of Scotland survey.
That said, the seasonally-adjusted Permanent Placements Index slid from 71.7 in March to 65 in April, signalling the softest increase in permanent staff appointments in the year to date.
In contrast, temporary billings expanded at the quickest rate since last September. Recruiters also noted that candidate availability fell more sharply, while demand for staff surged higher during the latest survey period.
Consequently, there was further upwards pressure on rates of pay, with both starting salaries and wages increasing rapidly.
Recruitment consultancies across Scotland noted a 16th successive monthly increase in permanent staff appointments during April. Although quicker than the UK-wide trend, the latest upturn in permanent placements was the slowest in four months.
Panellists often mentioned that greater activity at clients and improved market confidence drove the latest upturn in placements. April data indicated a sharp rise in billings received from the employment of temporary staff at Scottish recruiters.
The rate of expansion has now picked up in each of the past three months, with the latest increase the fastest since September 2021. Strong demand for staff, the filling of vacancies and recommencement of projects that had previously been on hold due to Covid-19 were all attributed to the latest upturn.
The rate of increase in temp billings in Scotland was quicker than the UK average, which in contrast to Scotland, slowed slightly in April.
Recruiters across Scotland reported a substantial fall in the availability of permanent candidates during April. The decline extended the current sequence of contraction to 15 months; with the latest drop being the quickest in the year to date.
Survey respondents often blamed ongoing skills shortages and a reluctance among workers to switch roles due to the pandemic for the latest decline. Moreover, the rate of decrease in Scotland was faster than that seen at the UK level for the first time in four months.
As has been the case for the last 14 months, temporary candidate availability dropped during April. The rate of decline quickened from March. Increased demand for staff and fewer foreign workers were attributed to the latest fall in temporary staff supply.
Panellists stated that businesses were more willing to increase starting pay for necessary skills amidst a very competitive job market and candidate shortages.
Despite easing from the survey record seen in March, the rate of starting salary inflation remained one of the fastest seen since data collection began in 2003. Scottish recruiters signalled an increase in average wages for temp staff for the 17th consecutive month in April.
The rate of inflation slowed to the softest since July 2021, but remained rapid overall. Firms linked the latest rise to low candidate availability and robust demand for workers.
However, the rate of wage inflation remained slower than the UK-wide average. Permanent vacancies increase at fastest rate in eight months.
At the sector level, IT and computing recorded the fastest expansion in vacancies, followed closely by engineering and construction.
Scottish recruiters recorded a 19th consecutive monthly rise in temporary staff demand in April. The rate of expansion quickened from March to the sharpest in five months.
The upturn in temp vacancies outpaced the UK-wide trend. Of the eight monitored job sectors, vacancies rose at the sharpest rate in blue collar roles, with IT and computing only fractionally behind.
Sebastian Burnside, chief economist at RBS, commented: “April data signalled a further steep rise in hiring activity across the Scottish labour market, marking the sixteenth consecutive month in which permanent staff appointments have increased.
“Though the latest upturn was a fair bit slower than those seen earlier this year, it indicated a further strong recovery as pandemic-related pressures continued to subside.
“Recruiters also saw growing demand for staff, with both permanent and temporary vacancies expanding at quicker rates than in March, despite reports of difficulties filling roles.
“Panellists noted acute skills shortages, with the supply of workers shrinking at a much faster pace than in the previous survey period. Subsequently, rates of starting pay continued to increase substantially.”
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