Jon Holt, Chief Executive and Senior Partner of KPMG in the UK, said:

“While the Bank of England’s easing of interest rates will have provided a much-needed lift to businesses and the investment market, the impact on the economic outlook will not be felt immediately. This latest survey data was gathered before the rate cut, and it gives a subdued picture of the labour market as the downturn moves into its second year.

“Despite the stability of a new Government and easing inflationary pressures, employer confidence to recruit has not yet returned, leading to delays with permanent hiring and even a small contraction in the temporary market as worker contracts are not renewed. In the sectors where employers are still hiring, a lack of skilled talent continues to drive pay growth.

“With forecasts for economic growth improving and potential further interest rate cuts over the coming months there are green shoots of economic recovery. But it’s still early days for this new Government and businesses may be cautious to hit go on their full recruitment and investment strategies until they have heard more from the Chancellor in her Autumn Budget.”