Recruitment in the North deteriorates further but pay pressures ease, according to new report

Further improvements were seen in the availability of both permanent and temporary workers in October. That said, rates of expansion slowed compared to September, with permanent staff supply increasing at the softest pace for five months.

The report, compiled by S&P Global, said that October saw pay pressures for permanent staff ease further, with starting salaries rising at the slowest pace since April 2021. Conversely, short-term staff experienced a stronger rise in wage rates compared to September

Euan West, office senior partner for Leeds at KPMG UK, said: “The issue at hand is that we have people who want to work but they do not have the skills needed for the roles that exist.

"This is why we continue to see a rise in starting salaries, as organisations scramble to access top tier talent. The competition for skilled workers in areas that are in high demand is likely to continue until we address the crux of the problem through reskilling and upskilling programmes.”

Meanwhile, business confidence has dipped slightly across Yorkshire but remains higher than the UK average, with overall confidence in the UK falling to its lowest in 2023, according to the latest Accenture / S&P Global UK Business Outlook.

The net balance of Yorkshire firms expecting activity to increase over the next 12 months dropped to +48 per cent. This is a decrease from +58 per cent from June, but was 11 points higher than the rest of the UK which slid to +37 per cent, down from +40 per cent in June and +43 per cent in February.

Alongside the positive outlook from businesses in Yorkshire, +34 per cent are expecting a net gain in profits, which is double than the UK average of +17 per cent, with the same net balance of businesses (+34 per cent) offering positive predictions for employment over the next 12 months.

However, expectations for an increase in salary costs were the highest they have been at +81 per cent, with a 17 point increase in the run up to the festive season, suggesting that efforts to increase employment and address current skill gaps could see high wage inflation continue.

Helen Morgan, Leeds City Region lead for Accenture, said: “It is incredibly encouraging to see businesses across the region maintaining some levels of confidence for the next 12 months despite ongoing uncertainty, especially when compared with the outlook of European and global businesses.

“While wider economic challenges remain a concern, particularly for Yorkshire’s service industry, new products, strong finances and sales growth across the manufacturing sector offer reasons for optimism.”

She added: "The businesses in the region who are focusing on R&D investments and prioritising their employment plans will be more likely to reap the rewards of higher profits and stronger resilience during any future uncertainty.”