Tag: Royal Bank of Scotland

Downturn in permanent hiring activity eases during December

Royal Bank of Scotland report on jobs 

  • Recruitment activity falls for the third month running
  • Growth of demand for labour softens during December
  • Starting salaries rise at quickest pace since June

According to the latest Royal Bank of Scotland Report on Jobs survey, Scottish recruiters reported a decline in permanent placements during December. The rate of contraction eased considerably over the month, however, with the respective index climbing from 40.6 in November to 46.8 in December.

Nevertheless, placements fell for the third month running overall, as recession fears and market uncertainty dampened recruitment activity. Temp billings likewise fell for the third successive month. Growth of demand for labour continued to soften during the final month of the year.

Permanent and temp vacancies expanded at the weakest rates in 22 and 27 months, respectively. Nonetheless, in efforts to attract and secure candidates amid ongoing reports of labour shortages, firms across Scotland continued to raise starting salaries and temp wages sharply.

Softer reduction in permanent placements

The number of permanent staff appointments across Scotland fell in December, thereby extending the current run of contraction to three months. The downturn eased from November’s 29-month record, but was nonetheless solid overall. According to panellists, reduced market confidence and the cost of living crisis weighed on recruitment.

Though strong, the reduction in permanent placements across Scotland was softer than the UK-wide average.

For the third month running, recruitment consultancies across Scotland reported a decrease in billings received from the employment of short-term staff during December. Adjusted for seasonality, the Temporary Billings Index ticked down from November, to signal a quicker rate of contraction, albeit one that remained mild overall. Skill shortages and difficulties sourcing candidates were in part blamed for the latest decrease.

While a further reduction in temp billings was recorded across Scotland at the end of 2022, the UK as a whole registered a modest expansion.

Marked fall in permanent labour supply in December

The availability of candidates to fill permanent positions across Scotland worsened for the twenty-third consecutive month during December. Although easing from November, the rate of decline remained marked overall and among the fastest on record. Acute skill and candidate shortages limited the supply of workers, according to recruiters. Furthermore, the cost of living crisis, recession fears and greater market uncertainty also restrained labour movement.

The pace of reduction in permanent candidate availability across Scotland outstripped the UK-wide average.

As has been the case in each of the last 22 months, Scottish recruiters reported a fall in temp candidate numbers during December. The rate of reduction gathered pace for the third month running and was the sharpest since June. The latest reduction in temp staff availability was attributed to a slowdown in market conditions, Brexit and a general scarcity of labour.

Starting salaries rise rapidly in December

December data revealed another sharp rise in starting salaries awarded to permanent joiners during December. Notably, the pace of growth continued to quicken from October’s 16-month low, with the latest upturn the steepest since June and above the historical average. According to anecdotal evidence, labour and skill scarcity continued drive up salaries.

Starting salaries across Scotland rose at a much faster pace than that recorded at the UK level.

Pay rates for temp staff across Scotland rose during December, thereby stretching the current run of wage inflation to 25 months. While the rate of growth eased slightly from November, it remained stronger than the survey average and signalled a sharp rise in hourly wages overall. Recruiters indicated that companies raised their pay rates as part of efforts to attract staff amid ongoing labour shortages.

As was the case with permanent starting salaries, temp wages across Scotland grew at a much stronger rate than that seen across the UK as a whole.

Growth of demand for permanent staff eases in December

Growth of demand for permanent staff moderated for the eighth successive month during December. Though strong, the latest upturn was the softest seen since the current run of expansion began in February 2021. Moreover, the rate of increase was weaker than the survey average.

The strongest upturns in demand for permanent staff were seen across the Nursing/Medical/Care and IT & Computing sectors.

Scottish recruiters reported a marked slowdown in growth of demand for temp staff during December. Notably, the respective seasonally adjusted index fell to its lowest level in 27 months and pointed to only a marginal rate of growth.

Of the eight monitored sectors, IT & Computing reported the strongest increase in demand, with Nursing/Medical/Care ranking second.

Sebastian Burnside, Chief Economist at Royal Bank of Scotland, commented: “The final Report on Jobs survey of the year concluded with a further downturn in hiring activity across Scotland, with recruiters noting a third monthly contraction in both permanent placements and temp billings.

“According to panel members, greater market uncertainty and fears over a recession led clients to maintain a cautious approach to staff hiring at the end of 2022. Demand for labour also softened, adding to the likelihood that challenges across the labour market will persist as we enter the new year.

“Nonetheless, with difficulties sourcing suitable candidates, firms continued to raise rates of starting pay. Thus, the data overall suggest that firms are becoming more selective and guarded with their hiring decisions, but willing to offer competitive pay to candidates to secure them.” 

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Contraction across Scotland’s private sector gathers pace in November

  • Business Activity Index falls further below the neutral 50.0 threshold
  • Sharper decline in new orders
  • Business sentiment weakens in November

According to the latest Royal Bank of Scotland PMI® data, the Scottish private sector reported a deepening contraction in private sector output during November.

The Business Activity Index ticked down from 45.8 in October to 43.9 in November, signalling that fastest decrease in the current series of reduction that began in August. Hesitancy among clients amid economic uncertainty, the cost of living crisis and higher borrowing costs, stifled demand. Consequently, inflows of incoming new business continued to decline in November.

Moreover, the pace of reduction steepened in November and extended the current run of contraction to five months. Looking ahead, expectations regarding the 12-month activity outlook across Scotland weakened from October’s three-month high and was subdued in the context of historical data.

New business placed across Scotland’s private sector decreased sharply in November. The downturn quickened from the preceding survey period to the fastest overall in the current five-month run of contraction. An array of reasons were linked to the latest reduction in sales, including lower market activity, the cost of living crises, rising borrowing costs, and growing economic uncertainty resulting to delayed-decision making.

All of the 12 monitored UK regions reported a decline in inflows of new business, with Scotland registering the third-fastest downturn behind Northern Ireland and the East Midlands. 

Latest survey data signalled muted expectations for the 12-month activity outlook across Scotland. Business confidence weakened from October’s three-month high, posting well below the historical average. While there were hopes of growth in sales in the coming year, the ongoing downturn in activity weighed on sentiment.

Expectations towards future activity across Scotland were noticeably less upbeat than those recorded at the UK level.

Payroll numbers across Scotland’s private sector firms increased in November, extending the run of job growth to 20 months. The pace of job creation quickened slightly from October amid renewed growth in employment across the manufacturing sector. However, reports of resignations, rising uncertainty, reduced demand and job cuts resulted in only a marginal overall upturn in hiring activity.

The latest uptick in employment across Scotland printed broadly in line with that at the UK level.

For the sixth time in as many months, levels of outstanding business fell across Scotland during November. The rate of depletion was broadly unchanged from October, indicating a sharp decrease in work-in-hand overall. According to anecdotal evidence, completion of contracts and a drop in sales was linked to fewer backlogs.

The rate of decrease across Scotland outstripped the UK-wide average and was the second most severe after Northern Ireland.

Input prices across the Scottish private sector inclined rapidly during November, thereby extending the current run of inflation to two-and-a-half years. Adjusted for seasonality, the latest reading ticked-up to a three-month high. Firms blamed the latest increase in average cost burdens on energy prices, wages, higher shipping costs and the cost of living crisis.

However, the pace of input price inflation across Scotland was slightly slower than the UK-wide average.

Charge inflation entered its twenty-fifth month across Scotland during November. The pace of inflation further intensified from September’s recent low, signalling the fastest rise in charges in five months, but was marginally weaker than that recorded for the UK as a whole. The latest increase in charges mirrored the upturn in average costs burdens.

Source: Royal Bank of Scotland, S&P Global.

Judith Cruickshank, Chair, Scotland Board, Royal Bank of Scotland, commented: “The latest survey data signalled a stronger contraction across the Scottish private sector during November, as demand waned amid market uncertainty and the cost of living crisis.

“As a result, both activity and incoming new business fell as sharpest rates in the current four- and five-month sequences of reductions.

“Adding further strain on the sector was the continued intensification of price pressures. After cooling over the summer, input price inflation again accelerated in the fourth and final quarter of the year. Additionally, rates charged by private sector firms also increased at a quicker rate during November as firms tried to recoup costs.

“Overall, the penultimate month of the year pointed to confidence among private sector firms registering less upbeat than that seen in October, as economic challenges and feeble demand weighed on exceptions.”

Hiring activity weakens again

Royal Bank of Scotland November report on jobs

• Downturn in permanent staff hires accelerates

• Vacancy growth continues to soften

• Further sharp rise in starting pay

According to the latest Royal Bank of Scotland Report on Jobs survey, hiring activity fell across Scotland again in November amid greater economic uncertainty and strong cost pressures.

For the second month running, both permanent staff hires and temp billings fell, with the former recording the quickest reduction since June 2020. While staff availability continued to deteriorate, demand for labour expanded at a softer, but still strong rate.

The ongoing imbalance of labour demand and supply led to further rises in both starting salaries and short-temp pay.

Downturn in permanent placements gathers pace

For the second successive month, permanent placements fell across Scotland in November. The rate of reduction quickened from October to the fastest since the initial phase of the pandemic in June 2020 and was sharp overall. Increased market uncertainty and candidate shortages were blamed for the latest drop in permanent staff appointments.

Permanent placements also fell across the UK as a whole for the second month in a row, albeit at a softer pace than that seen in Scotland.

November data highlighted a fall in temp billings across Scotland for the second consecutive month. Adjusted for seasonality, the respective index pointed to a slower and modest pace of decrease. According to anecdotal evidence, concerns about the outlook weighed on labour market activity.

In contrast to the trend seen for Scotland, temp billings expanded modestly at the UK level.

Supply of permanent staff falls steeply in November

As has been the case since February 2021, the supply of permanent staff across Scotland contracted during November. Furthermore, the rate of deterioration was the most severe since May and among the fastest on record. Recruiters stated that a combination of labour and skill shortages, Brexit and economic uncertainty reduced the supply of candidates.

Notably, the downturn in permanent staff supply across Scotland outstripped the UK average for the eighth month in a row.

A twenty-first successive monthly fall in temporary candidates across Scotland was recorded during November. The rate of reduction accelerated on the month, and was the sharpest since June. The decline also exceeded that seen across the UK as a whole. Recruiters blamed the fall on a stronger preference for permanent roles, candidate shortages and economic uncertainty.

Upward pressure on starting salaries intensifies in November

Latest survey data signalled a further rise in salaries awarded to permanent new joiners in Scotland for the twenty-fourth successive month in November. The rate of pay inflation ticked up from October’s 16-month low, and was rapid overall. The latest rise in salaries was attributed to competition for labour amid staff and skill shortages.

For the second month running, Scotland noted a quicker rise in starting salaries than recorded at the UK level.

Average hourly wages increased further across Scotland in November, thereby stretching the current sequence of inflation to two years. The rate of pay growth accelerated from October’s 18-month low and was sharp overall. Scottish recruiters commonly noted that acute skill and candidate shortages continued to exert upward pressure on wages.

Further slowdown in growth of demand for permanent staff in November

November data pointed to another monthly increase in the number of permanent vacancies across Scotland, extending the current run of expansion that began in February 2021. That said, while growth remained strong, the rate of increase weakened to the second-slowest in the aforementioned sequence.

Across the monitored job categories, Nursing/Medical/Care reported the quickest rise in vacancies. Executive & Professional and Hotel & Catering reported reduced demand for permanent staff.

Recruiters across Scotland signalled a twenty-sixth successive monthly rise in temporary vacancies during November. However, the rate of expansion cooled since the previous month and was the softest seen since February 2021.

IT & Computing registered the quickest upturn in short-term vacancies, followed by Accounts & Financial.

Sebastian Burnside, Chief Economist at Royal Bank of Scotland, commented: “Following the post-pandemic hiring boom, the latest Report on Jobs survey indicates that recruitment activity lost further momentum in November amid a slowdown across the economy.

“Greater uncertainty around the outlook and candidate shortages have taken a toll on staff hiring across Scotland. Latest data indicated a notably steeper contraction in permanent placements, while temp billings fell for the second consecutive month.

“At the same time, labour scarcity resulted in strong growth in pay, with both starting salaries and hourly wages rising at sharper rates during November.

“The steeper drop in candidate availability across Scotland, which was often blamed on a generally low unemployment rate, fewer foreign workers, worries over the economic climate and cost of living crisis, is likely to add further upwards pressure on pay in the months ahead, particularly if firms want to attract and secure the skilled workers they need.”

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Royal Bank of Scotland: Downturn deepens amid falling demand

  • Business Activity Index falls to 45.8 in October from 48.0 in September
  • Contraction in new orders quickens
  • Growth in employment further weakens

The contraction across Scotland’s private sector firms deepened during October, according to the latest Royal Bank of Scotland PMI® data. Adjusted for seasonality, the Business Activity Index posted below the neutral 50.0 threshold for the third month running, at 45.8, indicating a sharp decrease overall.

Inflows of new business also went into further decline, the latest downturn being the most severe in 20 months. To further add weakness across the sector, inflationary pressures reaccelerated from September’s recent low, as service providers reported quicker upturns in input costs and charges during October.

The gloomy performance resulted to the softest intake of workers in 18 months, with goods producers reporting their first reduction in employment since January 2021.

New business received at Scottish private sector firms fell sharply during October. The rate of decrease quickened from September to the fastest in the current fourth-month sequence of reduction.

Of the two sub-sectors, manufacturing firms reported the steeper downturn. Companies noted that looming recession, economic uncertainty and the cost of living crisis weighed on client activity.

The downturn in incoming new business across Scotland outpaced the UK-wide average.

Output expectations for the year ahead across private sector firms in Scotland strengthened in the three months to October. The increase in confidence was underpinned on planned expansions and investment, with firms also hopeful of future economic stability. That said, sentiment was relatively muted in context of historical data.

Business confidence across Scotland was broadly in line with that recorded for the UK as a whole.

Employment across the Scottish private sector expanded for the nineteenth month running in October. However, amid a cooldown in hiring activity at service providers, with goods producers reporting their first contraction since January 2021, the overall rate of growth ticked down to the joint-lowest in the aforementioned series.

The rate of job creation across Scotland remained softer than that seen at the UK level, which similarly also slowed in October.

October’s survey showed a sustained fall in levels of outstanding business across Scotland’s private sector. The respective seasonally adjusted index posted below the neutral 50 threshold for the fifth consecutive month, the latest reading signalling the fastest depletion in work outstanding since January 2021. As per surveyed businesses, declines in new orders allowed firms to work through previous backlogs.

The rate of contraction in Scotland was the third-fastest across the UK, ahead of Northern Ireland and Wales.

October data signalled a robust rise in input costs across Scotland’s private sector, thereby extending the run of inflation to 29 months. Adjusted for seasonality, the latest reading increased from September’s 13-month low as a result of a reacceleration in input price inflation reported at service firms. The uptick in average costs was attributed to higher wages and utilities, cost of living crisis and general inflation adding strain on costs.

Despite being severe, the pace of input price inflation was however, softer than the UK average.

In line with the upturn in average cost burdens, charge levied by Scottish private sector firms also inclined from September’s recent low at a quickened rate during October.

The rate of charge inflation across Scotland posted weaker than the UK-wide average which slowed during October.

Source: Royal Bank of Scotland, S&P Global.

Judith Cruickshank, Chair, Scotland Board, Royal Bank of Scotland, commented: “The Scottish private sector reported a third month of contraction during October. The downturn in activity quickened on the month, as stubbornly high inflationary pressures, the ongoing cost of living crisis and a threat of recession deterred growth. New orders received at firms also fell further.

“Employment trends across the sector indicated a slowdown in hiring activity over the recent months. The latest upturn was the joint-softest in the current 19-month sequence of expansion. At the same time, the level of outstanding business also fell at a much sharper rate. The data thus suggesting the further weakness in the labour market will not be surprising.

“As we proceed into the final quarter of the year, market conditions are set to become more challenging. The aggressive interest rate hikes, the decline in the value of sterling against the dollar and the rebound in post-COVID demand phasing out, all amidst the ongoing cost of living and energy crises, all point to an extremely difficult period for Scotland.”  

Royal Bank of Scotland: October report on jobs

Renewed downturn in permanent placements during October

  • Permanent placements fall amid growing economic uncertainty
  • Temp billings decline for first time in 26 months
  • Pay pressures soften, but remain strong overall

Hiring activity across Scotland fell into decline during October, with both permanent staff appointments and temporary billings contracting, according to the latest Royal Bank of Scotland Report on Jobs survey.

Permanent placements have now fallen in two of the past three months, while the downturn in temp billings was the first seen since August 2020. Moreover, the rates of contraction were strong overall amid reports of growing economic uncertainty, softening demand conditions and the deepening cost of living crisis.

October data also revealed further increases in starting salaries and temp wages. However, rates of inflation continued to ease, signalling a mild waning of pressure on pay.

Permanent staff placements fall solidly

October data highlighted a fall in permanent staff placements across Scotland. After a month of growth in September, the respective seasonally adjusted index reverted below the neutral 50.0 threshold to signal the second reduction in three months.

The rate of contraction was the fastest seen in nearly two years and solid, with recruiters often linking the fall to growing economic uncertainty and the cost of living crisis.

At the UK level, a fall in permanent staff hires was also noted, with the rate of decline similar to that seen in Scotland.

Scottish recruitment consultancies signalled a reduction in temp billings during October, thereby ending a 25-month run of expansion. The rate of contraction was the quickest seen since July 2020 during the initial wave of the pandemic and strong overall. According to panellists, the latest fall was driven by reduced activity at clients. 

Across the UK as a whole, temp billings were broadly stagnant after rising in each of the prior 26 months.

Downturn in permanent staff supply fastest in three months

Recruiters across Scotland noted a twenty-first successive monthly fall in permanent candidate availability during October. The pace of decline quickened on the month and was marked overall. Panellists generally linked the latest downturn to skill shortages and increased hesitancy to seek out new roles due to rising economic uncertainty.

The pace of reduction across Scotland was more rapid than that recorded for the UK as a whole.

The supply of temp labour across Scotland fell again during October. Despite being severe overall, the rate of decline was the second-slowest in seven months (after September). Recruiters highlighted a lack of European workers and ongoing skill shortages as factors constraining supply.

As has been the case for the last seven months, the rate of contraction in temp staff availability in Scotland was sharper than that seen at the UK level.

Starting salary inflation softens further in October

Latest survey data indicated that average starting salaries for permanent staff in Scotland increased at the slowest pace since June 2021 during October. That said, the pace of wage inflation remained elevated in comparison to the historical average. According to anecdotal evidence, skill and candidate shortages continued to drive up rates of pay.

Data for the UK as a whole also signalled a softer rise in starting salaries during October. Moreover, the pace of inflation was softer than that seen for Scotland for the first time in four months.

As has been the case for the past 23 months, temp wages rose across Scotland during October. While the respective seasonally adjusted index hit an 18-month low, it signalled a sharp rise overall. Greater competition for scarce candidates was cited as a key driver of the latest increase in temp pay.

At the national level, wages also increased at a much slower rate during October. However, the rate of inflation was quicker than that registered in Scotland.

Demand for permanent staff expands at slowest pace in 20 months

Demand for permanent staff grew sharply during October, thereby extending the current period of expansion to 21 months. However, the respective seasonally adjusted index fell for the sixth month running, with the latest reading edging down to a 20-month low.

Across the monitored job categories, IT & Computing registered the steepest rate of expansion, followed by Nursing/Medical/Care.

Recruiters across Scotland noted a twenty-fifth successive monthly rise in temp staff demand during October. While the rate of growth was the weakest since February 2021, it was quicker than that seen across the UK as a whole.

At the sector level, IT & Computing saw the quickest growth in short-term vacancies, followed by Accounts & Financial.

Sebastian Burnside, Chief Economist at Royal Bank of Scotland, commented: “Labour market conditions across Scotland deteriorated in October, as for the first time since August 2020, both permanent placements and temporary billings contracted.

“At the same time, rates of vacancy growth for both permanent and short-term staff continued to ease. Candidate and skill shortages meanwhile stretched the supply of labour thin, with recruiters also noting that increased economic uncertainty had impacted candidate numbers. Though it does seem that market imbalances are becoming less pronounced, the effect on pay remains strong.

“The data therefore suggest that growing uncertainty about the economy and the cost of living crisis are already affecting the labour market, and could weigh further on hiring decisions for the remainder of the final quarter of 2022.”

Business activity falls for second month running amid sharper falls in new work

  • Accelerated contraction in new work
  • Sentiment weakens further in September
  • Inflation remains elevated, but softens

Business activity across Scotland’s private sector contracted again in September, according to the latest Royal Bank of Scotland PMI® data. The seasonally adjusted headline Royal Bank of Scotland Business Activity Index – a measure of combined manufacturing and service sector output – was little-changed from 47.8 in August at 48.0, signalling a second consecutive month of contraction.

Despite easing, a high inflationary environment drove the latest decline in business activity and new orders, with the rate of contraction for the latter gaining momentum.

The challenging conditions meant that the degree of confidence further weakened during September. The latest reading registered a 28-month low, suggesting subdued performance as we progress into the final quarter of the year.

New business received at Scottish private sector companies contracted for the third month running during September. The rate of reduction quickened on the month and was solid overall. Inflationary pressures and the cost-of-living crisis were primarily linked to the latest downturn. 

At the sectoral level, manufacturing firms reported the softest decline in factory orders in three months, while services providers reported their first contraction since March 2021.

Amid soaring prices and recession fears, overall activity expectations weakened for the second consecutive month in Scotland’s private sector in September. Business confidence hit a 28-month low, posting below the average recorded over the series history and much weaker than the UK-wide average.

As has been the case since April 2021, employment across Scotland’s private sector increased in September. According to anecdotal evidence, successful hiring was in part linked to fresh graduates entering the workforce. While the respective seasonally adjusted index improved marginally from the that seen in August, it was the second-lowest reading in 17 months.

The pace of employment growth in Scotland was softer than the UK average.

September data revealed a reduction in backlogs of work for the fourth consecutive month at private sector companies in Scotland. The rate of depletion quickened to the fastest in 20 months. Respondents frequently mentioned the fall in backlogs reflected fewer new orders.

The rate of reduction at Scottish private sector companies was quicker than the UK-wide average which, in contrast to Scotland, softened during September.

For the twenty-eighth month running, average cost burdens rose across private sector firms in Scotland during September. The rise was largely blamed on inflationary pressures in labour market and supply chains. Despite the rate of input price inflation remaining historically high, the latest incline was the softest since August 2021 with both sectors noting slower rates of inflation.

Moreover, the pace of inflation in Scotland lagged behind that seen at the UK level, posting the second-softest of the 12 monitored regions ahead of the South West of England.

Scotland’s private sector firms raised their charges during September, thereby stretching the current run of output price inflation to 23 months. According to panellists, prices were raised primarily to offset increasing costs. That said, the rate of output price inflation was the weakest in 13 months and the softest of the 12 monitored UK regions.

Source: Royal Bank of Scotland, S&P Global.

Judith Cruickshank, Chair, Scotland Board, Royal Bank of Scotland, commented: “Business activity and new orders continued to decrease across the Scottish private sector during September, thereby stretching the current runs of contraction to two and three months respectively.

“The squeeze on customer disposable incomes amid a high inflation environment underpinned the latest downturn in output and new business.

“Despite falling business requirements, firms raised employment for the eighteenth successive month, albeit at a moderate pace. The combination of a drop in new work and expanding workforces allowed firms to work through their backlogs.  

“The post-pandemic boom is clearly at an end, as the ongoing cost-of-living crisis plays an increasingly important role. Moreover, the 12-month outlook continues to weaken.”

Royal Bank of Scotland Jobs report shows permanent placements increase in September, but growth “mild”

  • Fresh uplift in permanent staff appointments, but growth only mild
  • Temp billings rise at quicker pace
  • Pay pressures ease, but remain historically sharp

Scotland’s labour market saw an improvement in overall hiring activity in September, according to the latest Royal Bank of Scotland Report on Jobs survey, with recruiters reporting a fresh rise in permanent placements and stronger temp billings growth.

The seasonally adjusted Permanent Placements Index rose back above the neutral 50.0 mark, rising from 47.3 in August to 52.7 in September, to signal a mild uplift in permanent staff appointments, while temp billings increased at a strong and accelerated rate. 

At the same time, sustained growth of vacancies, combined with another deterioration in candidate availability, led to further upwards pressure on pay. Notably, both starting salaries and temp wages increased at historically sharp rates, despite easing since August.

Permanent placements return to growth

Adjusted for seasonal variation, the Permanent Placements Index rose back above the neutral level of 50.0 in September to signal a fresh rise in permanent staff appointments across Scotland. Panellists attributed the upturn to strong demand for staff and increased hiring activity amongst clients in some sectors. That said, the pace of increase was only mild.

September data pointed to sustained growth of temp billings across Scotland, extending the current sequence of upturn that began two years ago. The rate of expansion ticked up from August’s seven-month low and was solid overall.

The pace of increase in temp billings in Scotland was broadly in line with the trend seen for the UK as a whole.

Further marked drop in permanent candidate availability

The supply of permanent staff across Scotland continued to decrease in September, stretching the current sequence of contraction to 20 months. Skills shortages and high demand for staff reportedly drove the latest fall. Notably, the rate of decline quickened slightly on the month and was marked overall.

Scotland recorded a much sharper fall in permanent staff supply than that seen on average across the UK, with the pace of decline slowing slightly on the month at the national level.

Adjusted for seasonal variation, the Temporary Candidate Availability Index remained below the neutral 50.0 mark in September, signalling a nineteenth straight monthly deterioration in the supply of temp staff across Scotland and one that was rapid overall. Panellists cited strong demand for short-term workers and a reluctance among candidates to move roles. Although it remained much sharper than that seen at the national level, the pace of contraction was the slowest for six months.

Rate of starting salary inflation eases to 15-month low

September data signalled a sustained uplift in salaries awarded to permanent new joiners in Scotland, amid reports that strong demand for staff led to upwards pressure on pay. Though historically sharp, the rate of salary inflation was the slowest for 15 months, and weaker than that recorded for the UK as a whole.

A twenty-second monthly increase in hourly rates for short-term staff in Scotland was recorded in September. According to survey respondents, skills shortages were the primary cause of the latest rise. The rate of temp wage inflation softened to a four-month low, but was nonetheless sharp and outpaced the UK-wide average.

Permanent vacancies rise at slower rate

As has been the case in each month since February 2021, demand for permanent staff in Scotland increased in September. The rate of expansion was the softest seen for a year-and-a-half, albeit sharp by historical standards.

IT & Computing recorded the fastest rise in permanent vacancies, followed by Nursing/Medical/Care, while Hotel & Catering saw the slowest.

Temporary vacancies across Scotland continued to rise in September, extending the current sequence of growth to two years.  The rate of increase was the slowest since February 2021, but still sharp overall.

Across the monitored sectors, demand for temp staff was strongest in IT & Computing, followed by Accounts & Financial.

Sebastian Burnside, Chief Economist at Royal Bank of Scotland, commented: “Permanent staff appointments across Scotland rose during September following a moderate fall in August, amid reports of improved hiring activity at clients in some sectors and strong demand for workers.

“The rate of growth was only mild, but nonetheless outpaced the UK-wide average. Temp billings also increased, with growth ticking up since August to a solid pace.

“The imbalance between staff demand and supply continued to place upwards pressure on pay in September.

“The latest survey showed that both permanent and temporary staff availability continued to decline sharply, which drove further increases in temp pay and starting salaries at rates seldom seen in the history of the survey.”

Scottish private sector suffers first contraction since February 2021

  • Output contracts during August amid quicker fall in new orders
  • Growth in employment moderates
  • Business outlook dampens, as confidence hits 27-month low

Scottish private firms registered the first contraction in 18 months, according to the latest Royal Bank of Scotland PMI® data.

The seasonally adjusted headline Royal Bank of Scotland Business Activity Index – a measure of combined manufacturing and service sector output – posted 47.8 in August, down from 50.2 in July.

Below the neutral 50.0 threshold for the first time since February 2021, the latest reading indicated a modest decrease in private sector activity. At the same time, inflows of new work fell for the second consecutive month, and that too at a quickened pace.

The drop in business requirements allowed firms to work through backlogs, resulting to capacity pressures easing for the third month running. Also, the rate of job creation measured the weakest in 16 months, signalling a slowdown in hiring activity.

On the flipside, weakening demand gave a respite to inflationary pressures; input prices rose at the weakest pace in seven months, while firms raised their charges at the second-slowest rate since January.

For the second consecutive month, a contraction was recorded in new business received at the Scottish private sector during August.

The rate of decrease quickened on the month as inflows of new orders received at service firms stagnated, while manufacturing companies noted a fourth running month of reduction. According to surveyed businesses, the downturn stemmed from weakening client demand, Brexit, the Ukraine-Russia war, and rising economic uncertainty.

Moreover, the pace of decrease registered across Scotland was stronger than that seen for the UK as a whole.

Expectations towards future activity at Scottish companies moderated during August. The level of positive sentiment dropped to a 27-month low. Rising recession risks, the cost-of-living crisis and declining demand all dampened the 12-month outlook.

Scotland registered weaker output expectations than Wales and all English regions except the North East, although it was more optimistic than Northern Ireland.

Scotland’s private sector firms raised employment for the seventeenth successive month in August. However, reduced business requirements resulted in a slowdown in hiring growth. The latest reading signalled the softest expansion in workforce numbers since April 2021. Firms also cited hiring difficulties amid a highly competitive jobs market.

The latest upturn across Scotland was softer than that at the UK level.

Backlogs of work at Scottish private sector firms fell in August for the third consecutive month. The rate of depletion quickened marginally on the month as the respective seasonally adjusted Outstanding Business Index was largely pulled down by a sharp drop seen across the manufacturing sector. Respondents noted that reduced order volumes and additional staff allowed them to clear away backlogs.

Overall, the rate of reduction was only marginally faster across Scotland than that seen across the UK as a whole.

Average cost burdens facing private sector firms in Scotland increased during August, thereby extending the current run of inflation to 27 months. While the rate of input price inflation recorded the weakest in seven months, it remained strong in the context of historical data. COVID, Brexit, the war in Ukraine and rising energy and raw material prices were all in part blamed for the latest incline.

As has been the case for the last 22 months, Scottish private sector firms continued to raise their charges during August. Thought the respective seasonally adjusted index posted the second-lowest in seven months, it remained comfortably above the long-run series average. According to panellists, the rise in charges reflected higher input costs.

Scotland registered the weakest increase in charges across all 12 UK areas monitored in August.

Source: Royal Bank of Scotland, S&P Global.

Judith Cruickshank, Chair, Scotland Board, Royal Bank of Scotland, commented: “August data signalled a deterioration across the Scottish private sector, as activity levels fell for the first time in 18 months. Moreover, weak client demand and rising economic uncertainty, with a threat of a recession looming, resulted in falling inflows of new business.

“The latest survey data did indicate some easing of upward pressure on input costs as a result of a reduction in client appetite. Nonetheless, inflation rates remained stubbornly strong.

“Moreover, the contraction across the sector impacted business confidence, which hit a 27-month low during August. Market uncertainties and the cost-of-living crisis heavily weighed on optimism and suggests a gloomy performance in the months ahead.”

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Royal Bank of Scotland Report on Jobs

Permanent staff hires fall for first time in 20 months

  • Permanent placements fall for the first time since December 2020
  • Temp billings growth softens to seven-month low
  • Sustained pressure on pay amid candidate shortages 

August data revealed a renewed fall in permanent staff hires across Scotland, according to the latest Royal Bank of Scotland Report on Jobs survey.

The seasonally adjusted Permanent Placements Index fell below the 50.0 no-change mark, to signal a modest drop in permanent staff appointments that ended a 19-month period of expansion. Growth in temp billings meanwhile moderated to a seven-month low in August. According to panellists, skills and candidate shortages weighed on hiring activity.

However, some recruiters also noted that an economic slowdown and rising market uncertainty added to the loss of momentum across the Scottish labour market. At the same time, demand for staff continued to rise, which drove further increases in both starting salaries and hourly wages. 

Permanent placements fall for first time since December 2020

Scottish recruiters reported a fall in permanent staff appointments during August, thereby ending a 19-month period of expansion. Anecdotal evidence suggested that the contraction stemmed from a slowdown in market conditions and candidate shortages.

Though only modest, the reduction in Scotland contrasted with the trend seen across the UK as a whole, which saw a slightly quicker increase in permanent placements in August.

Temporary staff billings across Scotland increased for the twenty-fourth successive month during August. Though solid, the rate of expansion eased to the slowest since January and was below its long-run average. The uptick in temp billings was in part attributed to increased activity at clients. Where a reduction was reported, panellists cited, lingering COVID-19 impacts and rising economic uncertainty.

Moreover, the rate of increase in Scotland was weaker than that seen across the UK as a whole.

Decline in permanent candidate availability weakest since March

August data highlighted a further reduction in the supply of permanent candidates across Scotland. The respective seasonally adjusted index has now posted below the neutral 50.0 threshold for the nineteenth month running. Acute skill and candidate shortages were linked to the latest decline.

However, though the extent to which permanent staff availability contracted was the slowest in five months, it remained sharper than the UK-wide trend.

The availability of candidates to fill temporary roles in Scotland continued to decline during August, stretching the current run of contraction that began in March 2021. However, the rate of deterioration eased for the third month running and was the slowest since March.

Compared to the UK-wide average, Scotland registered a faster fall in temp candidate availability for the fifth successive month.

Starting salary inflation remains elevated in August

Recruitment agencies across Scotland reported a twenty-first consecutive monthly rise in salaries awarded to new permanent joiners during August. The rate of starting salary inflation quickened fractionally from July and was sharp, albeit the second-softest in 13 months. According to Scottish recruiters, labour shortages drove up salaries.

However, Scotland continued to record a softer rate of increase in starting salaries than that seen at the UK level.

August data revealed yet another sharp increase in average hourly pay for short-term staff across Scotland. The latest uptick extended the current run of expansion to 21 months. Moreover, the rate of growth picked up from July and was the second-fastest since December 2021. According to anecdotal evidence, firms continued to raise wages to attract workers amid labour and skill shortages.

Temp pay also increased at a quickened rate at the UK level during August, albeit one that remained weaker than that seen in Scotland.

Softest increase in demand for permanent staff for 17 months

Adjusted for seasonal variation, the Permanent Vacancies Index posted above the neutral 50.0 level to signal a nineteenth successive monthly increase in demand for permanent workers across Scotland during August. Though sharp and well above the series average, the rate of growth was the weakest since March 2021.

Of the eight monitored sectors, Nursing/Medical/Care saw the strongest upturn in permanent staff vacancies, followed by IT & Computing.

Demand for temporary staff in Scotland rose for the twenty-third month in a row during August. The respective index indicated a strong increase demand overall that was unchanged from July. Notably, the rate of expansion continued to outpace that seen across the UK as a whole.

Engineering & Construction recorded the fastest rise in temp vacancies across the monitored sectors, followed by IT & Computing.

Sebastian Burnside, Chief Economist at Royal Bank of Scotland, commented: “Since April, growth in permanent placements had softened, and now the latest data finally recorded the first fall in permanent staff hires in 20 months during August.

“A loss of momentum was also observed for temp billings, which rose at the softest pace since January. The weaker trends were accompanied by reports that rising economic uncertainty had limited recruitment activity.

“Moreover, labour supply and demand imbalances persisted. Acute skill and labour shortages weighed on the availability of candidates, while demand for labour continued to rise, albeit not as quickly as earlier in the year.

“With firms competing for labour, this resulted in further steep increases in starting salaries and temp wages during August.”

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Edinburgh is most expensive city for students

  • Edinburgh is the only UK city where student spend outweighs their income
  • Cardiff tops the Royal Bank Student Living Index as most affordable
  • Canterbury University most likely to be picked for subject choice, followed by Glasgow University
  • Glasgow University students report the highest levels of stress
  • Average student incomes have increased by 65% compared to 2021
  • Outgoing costs for students are 29% higher than last year

Edinburgh is now the most expensive place in the UK for students to live as revealed in the Royal Bank of Scotland Student Living Index. The index takes account of student spending and income to calculate a score for university towns and cities across the UK.

This year has shown that household bills have more than doubled for students with an average cost of £56.45 per month, with supermarket spending accounting for the single biggest monthly outlay at £76.29 each month.

Edinburgh has the highest cost of student living. Students in the Scottish capital have a monthly term-time income of £934, the lowest of all the cities ranked, whilst their total monthly spending is at £949. Edinburgh students are the least likely to combine studying and working during the academic term.

In contrast, Cardiff tops the list of UK cities for the best value for money. Below average rent prices combined with higher-than-average term-time incomes contributed to Cardiff being named the most affordable student city.  

Term time income for Cardiff students averages at £2241.65 and is the fifth highest of all the cities surveyed. They spend an average of £1,041 in total – the fourth lowest of all the cities in the Student Living Index.

The Royal Bank Student Living Index surveyed 2,964 students across the UK to determine the most affordable place to study. The survey accounts for factors such as how much students spend on going out to income through part-time work.

Oxford is now the most expensive place for a pint, with students expecting to pay £5.50 per drink, closely followed by London with an expected cost of £4.90. In comparison to Durham where students can expect to pay just £3.20 and Coventry at £3.40.

Students studying in London and Manchester were the most likely to rely on parents or family for income. London students received £295.10 more from this source than the UK average of £334.40 and those in Manchester £193.10. Compared to 2021, Oxbridge students are relying less on parents and family to pay rent and more so on bursaries and scholarships in 2022.

When it came to budgeting, over a third (35%) of students have found themselves running out of money by the end of term – 8% higher than in 2021. Just under one in five students said that they find managing their money stressful, and this the most pronounced in Coventry. Students in Cambridge are the most likely to put away month each month, 82% higher than the UK average.   

Perhaps in response to Covid-19 restrictions ending, compared to 2021 students are spending an average of 63% more on going out than the previous year.

A quarter of students felt that their universities do nothing to help with the ongoing cost of living crisis. Durham had the highest number of students who felt they had no support from their university at 56%.

Addressing the cost of living challenges, almost nine in ten (88%) students have made lifestyle changes to live within their budgets, with reducing the number of items bought online the most widely adopted change.

Changes to how students shop in the supermarket have also been a factor, with 46% saying they’ve swapped to own-brands. Meanwhile, 43% said they were buying fewer takeaways. 

Laura Behan, Head of Royal Bank Student Accounts said: “Despite the cost of living increasing dramatically, we’ve not seen that hit students quite as hard as may have been expected this year. Rents were set well in advance of the academic year and inflation increased much later into the academic year.

“However, with the cost of living increasing, especially as we look towards the start of the new university year in September, it is vital that students properly manage their finances. We offer a range of tools to help, including spend categorisation in our mobile app so students can see exactly where their money is going every month and a Round Ups tool to help develop a strong savings habit.”

The Royal Bank of Scotland student account offers a £80 cash incentive within the first 30 days of opening the account, a four-year tastecard membership and a £2000 interest free overdraft.

Royal Bank also offers free Financial Health checks to help students to organise their finances.

Find out more at www.rbs.co.uk/students  

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