Temp billings rose sharply, however, with growth picking up from June. At the same time, demand for permanent staff softened, as growth in vacancies hit a 16-month low.

Although rates of starting pay continued to rise sharply, recruiters noted softer rises in both starting salaries and temp wages compared to June.

July data highlighted a nineteenth successive monthly increase in permanent staff appointments across Scotland. However, the rate of expansion softened for the fourth month running, with the latest upturn the slowest since February 2021. Where a rise was seen, recruiters mentioned high demand for workers.  That said, there were also reports that candidate shortages and hiring freezes at some clients amid increased economic uncertainty had weighed on growth.

A further rise in temp billings was signalled by Scottish recruiters in July, thereby extending the current run of expansion to 23 months. The latest uptick was the quickest seen in three months and sharp overall. Greater client activity and new contract wins prompted firms to hire additional short-term staff, according to panellists.

Moreover, the rate of increase across Scotland outpaced the UK-wide average, which in contrast eased slightly since June. As has been the case in each month since February 2021, the availability of permanent candidates shrank across Scotland during July. The rate of contraction picked up from June and was among the sharpest in the survey history.

The drop in availability was linked to skill shortages, a competitive labour market and economic uncertainty dampening worker movement. The decline in permanent candidate numbers across Scotland was noticeably stronger than that seen across the UK as a whole.

Latest data signalled a continued reduction in temp candidate availability across Scotland during July. Scottish recruiters linked the fall to fewer European workers, competition from permanent roles and skill shortages. However, the rate of decrease did soften from June to the weakest in three months.

Salaries awarded to permanent new joiners in Scotland increased for the twentieth successive month in July. Companies raised pay to attract and secure workers amid severe labour shortages, according to recruiters. That said, the rate of increase eased on the month, registering the softest upturn in starting salaries for a year.

Additionally, starting salary inflation across Scotland was slower than that seen across the UK as a whole. Temp wages rose sharply across Scotland in July, stretching the current run of inflation that began in December 2020. The respective seasonally adjusted index, while historically elevated, slipped from the eight-month high seen in June. Panellists primarily linked the latest rise in wages to the fact that demand for labour outstripped supply.

Temp pay also increased at the UK level during July. However, the rate of increase was slower than that seen for Scotland. Demand for permanent staff in Scotland continued to expand during July, marking an eighteenth successive monthly rise. However, the rate of growth decelerated for the third month running and was the slowest since March 2021.

IT & Computing topped the rankings for permanent staff demand at the start of the third quarter, followed by Nursing/Medical/Care. As has been the case for the last 22 months, recruiters across Scotland reported a rise in temporary vacancies during July. While the rate of increase was the softest for five months, the upturn across Scotland was quicker than that observed for the UK as a whole. Engineering & Construction and IT & Computing posted the joint-fastest upturns in temp staff demand during July.

Sebastian Burnside, chief economist at RBS, commented: “July survey data pointed to a rise in hiring activity across Scotland. However, there was a notable slowdown in permanent staff hires, which expanded at the weakest rate since February 2021 amid reports of some businesses becoming more hesitant to push forward with recruitment plans due to the gloomier economic outlook.

“Additionally, while demand for labour remained strong, growth of both permanent and temporary vacancies softened for the third month in a row. Latest data also pointed to a slight waning of pressure on starting pay. Nevertheless, starting salaries and temp wages continued to rise sharply overall as many firms competed for scarce staff.
“Overall, the drop in market confidence around the outlook and ongoing difficulties sourcing and securing candidates could dampen recruitment activity in the months ahead.”