IT contractor demand fell sharply in May and contract/temp billing fell for the sixth month running and at the fastest pace since July 2009. Temporary/contract staff billings fell across all English regions in May, with the exception of the Midlands, which posted solid growth.
According to the Recruitment and Employment Confederation (REC)/KPMG Report on Jobs for May, recruiters cited client budget tightening and the effect of the Agency Workers Regulations (AWR) as contributory factors to the ongoing deterioration of the contracting market.
“This month’s data shows employers are becoming more cautious about hiring,” explains REC Chief Executive Kevin Green. “The temporary staff market has been contracting for the last six months. Clearly the economic backdrop and the eurozone crisis are making some employers think twice before taking on new staff.”
Although billings have fallen, vacancies for contractors and temps continue to rise, suggesting a combination of market mismatch and falling rates. The Report on Jobs’ Temporary Staff Vacancy Index, which indicates whether the number of vacancies has increased or decreased compared to the precious month, signalled the slowest increase in demand for short-term workers in the current 33-month period of expansion.
The fall in IT contractor demand is of particular concern because the demand index fell below the 50-point mark to 49.2, dropping to fifth place in the demand table. This indicates that demand in May was weaker than the previous month and for the first time since the final quarter of 2010. That is at odds with the permanent jobs market, where IT is comfortably leading the field.
And although there has been an overall fall in IT contractor demand, the market is clearly becoming segmented, as recruiters made specific mention of skills shortages across a range of IT sub-sectors.
Conversely, demand for engineering and construction contractors surged during May, taking the category into first place, with engineers across all major disciplines cited by recruiters as being in short supply. In the permanent jobs market, engineering and construction is in second place after IT & computing.
Green concludes: “We have a weakening jobs market, which will only improve once demand returns to the economy. More jobs being created in the private sector in 2012 is vital for our overall economic recovery, so anything which boosts confidence is good news – the Jubilee and the Olympics may yet help us turn the corner.”