Hiring activity across Scotland fell into decline during October, with both permanent staff appointments and temporary billings contracting.
The latest Royal Bank of Scotland Report on Jobs survey showed that permanent jobs have now fallen in two of the past three months, while the downturn in temporary posts was the first seen since August 2020.
October data also revealed further increases in starting salaries and temporary wages. However, rates of inflation continued to ease, signalling a mild waning of pressure on pay.
Last month's figures also highlighted a fall in permanent staff 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, with recruiters often linking the fall to growing economic uncertainty and the cost-of-living crisis.
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.
According to panellists, the latest fall was driven by reduced activity at clients.
Recruiters across Scotland noted a 21st successive monthly fall in permanent candidate availability during October. The pace of decline quickened on the month, with panellists linking 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.
The latest survey data indicated that average starting salaries for permanent staff in Scotland increased at the slowest pace since June 2021. 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.
Across the monitored job categories, IT and computing registered the steepest rate of expansion, followed by nursing and care.
At the sector level, IT and computing saw the quickest growth in short-term vacancies, followed by accounts and financial.
Sebastian Burnside, chief economist at RBS, 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."
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