The UK jobs market appears to be slowing, with vacancies growing last month at the lowest rate since October, according to a survey of 400 job agencies by the Recruitment and Employment Confederation and consultants KPMG.

Employers are tightening their belts and are nervous about investing more in staff, the survey said, while demand for permanent and temporary staff is weakening.

If the trend is reflected in official data, it could signal an end of the period in which employment has been growing strongly while economic output remains flat.

The survey also found that a two-speed labour market is emerging where there is a lack of candidates for high-skilled roles despite relatively high unemployment.

In last month’s official data from the Office for National Statistics, the recent strength in the labour market showed signs of waning as the jobless total rose to 2.52m or 7.8 per cent of the workforce in the three months to January. Employment grew more slowly and wages were squeezed even more fiercely.

In the REC/KPMG survey, both permanent and temporary staff hirings rose in March at their slowest for six and seven months respectively. Growth of vacancies was also at a seven-month low.

Bernard Brown, head of business services at KPMG, said: “The jobs market is finally catching up with the prevailing GDP picture as confidence amongst employers and candidates drops to a half-year low.”

Coming on the back of news of falling construction and manufacturing output, the latest data should come as no surprise, he added.

“It’s a sign that employers who were previously comfortable making short-term financial commitments are now nervous about undertaking any form of people investment.”

The strongest expansion of demand for permanent staff was in information technology and the weakest in hotels and catering. The most in-demand category of temporary staff was in the nursing, medical and care sector.

The Midlands, north and south registered higher permanent placements, but London saw a decline after two months of growth.

Private sector vacancies continued to increase. In the public sector, demand for temporary staff increased for the first time in three months, but demand for permanent employees was down marginally.

Kevin Green, REC chief executive, said the most significant issue was the emergence of a two speed labour market.

“Recruiters report that businesses are willing to pay better starting salaries to get the right talent but are struggling to find people with the right skills and experience as candidate availability declines,” he said.

Mr Green said it was a worrying trend that was particularly problematic across IT and engineering and at senior levels in other sectors. Persistent skills shortages in these areas could have a disastrous impact on critical infrastructure projects, he said, especially if employers could not find the staff they needed to start new ventures in energy, transport and construction.

“The government needs to build the talent pipeline for the future by increasing funding for apprenticeships in sectors where there is demand, refocusing the Work Programme to train people who have potential but who lack the skills to fill current vacancies and driving take-up for existing schemes like the Youth Contract.”

Mr Brown said that once the measures announced in last month’s Budget started to take effect, there might be a positive impact on business confidence, but there was a long way to go.

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