Demand for temporary staff in Scotland grew sharply in July, contrasting with the joint-slowest rise in permanent job vacancies since August 2016.

Meanwhile, both temporary and permanent candidate availability continued to deteriorate, leading to a further marked rise in pay pressures, according to the latest Royal Bank of Scotland Report on Jobs.

For the first time since January 2017, permanent staff placements declined in Scotland during July. Scotland has outperformed relative to the UK overall so far this year, but the trends between the two converged in July, as the fall in Scotland matched that seen for the UK as a whole.

However, Scottish recruiters indicated an increased drive towards short-term staff, with strong temp billings growth registered. This was a stark contrast to June, where temp staff billings decreased.

Although permanent job openings in Scotland rose further in July, the rate of growth eased for the fourth month running and was the joint-weakest in close to three years. The slowdown in Scotland was not mirrored across the UK as a whole, which saw an accelerated rise in permanent staff demand, however the rate of growth here was subdued by historical standards.

Signs of an increased shift towards short-term staff was also apparent in vacancies data, which showed the sharpest rise in temporary job vacancies in Scotland since December 2018.

Latest survey data pointed to elevated growth in permanent starting salaries in Scotland. The rate of inflation was unchanged from June and stronger than the average seen over the series history.

On the other hand, softer growth in temp wage rates was recorded in Scotland during the latest survey period. Although the rate of inflation was the weakest in four months, it was solid overall and on a par with the long-run trend.

Sebastian Burnside, Chief Economist at Royal Bank of Scotland, commented: “While Report on Jobs data has shown falling permanent placements at the aggregate UK level in each month since March, Scotland had shown resilience to defy this trend and continue posting healthy jobs growth in the first half of the year.

“However, the upturn in permanent staff appointments across Scotland came to an end in July, as permanent hiring fell for the first time in two-and-a-half years. Other indicators also showed signs of a softening labour market. Permanent vacancy growth dipped and was the joint-weakest since August 2016. Firms appeared to look to short-term workers to fulfil roles at their firms. Alongside the renewed rise in temp billings, demand for short-term staff rose at a sharper rate in July.”

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