The number of staff available to hire across the UK rose in March for the first time in more than two years with a modest increase in both permanent and temporary candidates.

The findings from the latest Report on Jobs produced by the Recruitment & Employment Confederation (REC) and accountancy group KPMG suggest the acute labour shortages that have gripped the UK since the pandemic could be easing slightly. However, lingering economic uncertainty and and rising costs continue to impact hiring trends.

The overall supply of workers increased for the first time since February 2021, with the staff availability index rising above the 50.0 mark that signals no change to hit 51.4, up from 47.5 the previous month. March's permanent staff index came in at 51.4, trailed marginally by the temporary staff index at 51.3.

"March was a curate's egg for the jobs market," said Claire Warnes, partner at KPMG. "Candidate availability improved for the first time in over two years as people regained the confidence to look for new roles, but economic uncertainty caused firms to make redundancies and often opt for temporary hires over permanent placements.

"This unease saw temporary billings rise at their quickest rate for six months and pay continue to increase in line with the cost of living."

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Presenting his Budget in March, Chancellor Jeremy Hunt set out a series of measures to encourage those who have left the labour market to get back into work. These were targeted at the over-50s, the long-term sick and disabled, and benefits claimants. 

"The government's spring Budget included some support for workers, but it was a missed opportunity to provide much-needed help for businesses to upskill their people, and to reskill those people who are economically inactive and want to return to work," Ms Warnes said, adding that the labour market is "nowhere near" pre-pandemic levels of stability.

"Such coordinated actions are needed to fill the ever-widening skills gap."

The rising cost of living and efforts to attract and secure suitable staff drove further "marked increases" in starting pay, with the permanent salaries index standing at 61.1 and that for temporary staff at 57.5.

Although edging down to the second-slowest for nearly two years, the rate of salary inflation was comfortably above the series average. Temporary pay growth eased fractionally to a three-month low, but remained sharply higher overall.

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Temp billings rose at the quickest rate since September 2022, and although permanent placements fell for the sixth month in a row, the pace of the decrease was marginal.

Survey respondents across the panel of approximately 400 recruitment consultancies reported a further "marked increase" in total vacancies, though this eased slightly from February's four-month high of 55.5. The permanent vacancies index stood at 55.4, and that for temporary staff came in at 52.3.

Increases in demand for staff were registered across both the private and public sectors, but to varying degrees.

The steepest increase was for permanent workers in the private sector, where growth eased only fractionally from February. The softest expansion in demand was for temporary workers in the private sector.

With the exception of retail, all ten of the monitored job categories registered a rise in demand for permanent staff in March. The steepest increase in vacancies was for nursing, medical and care staff, followed by engineering, accounting and financial workers.

Growth in demand for temporary workers was sustained across the majority of employment categories, led by hotel and catering. Temporary vacancies in retail stagnated, and demand for short-term blue collar staff fell solidly.