IT contractor market growth falls to 20-month low, as ‘heightened caution’ sets in

The IT contractor jobs market came close to no longer growing in October 2022, falling both for the fifth month in a row and to its lowest score in 20 months. 

Standing at not even four index points above the growth threshold (50.0), demand for computing and IT staff on a contract basis last month registered at 53.9. 

That compares to 54.9 in September 2022, and represents a new low this year, as IT contractor demand has not been ascribed a lower score since February 2021 (52.3). 

'Heightened caution, but not a retreat nor a retrenchment'

But the new data suggest “heightened employer caution” not a “retreat from the market” nor a “serious retrenchment,” caveats Neil Carberry of the REC, which produces the figures. 

Even more positively, Report on Jobs for October from the Recruitment & Employment Confederation (REC) adds no new detail to “hiring freezes.” 

Such hiring freezes were flagged up in September’s report and are explored today by the REC’s deputy CEO Kate Shoesmith, exclusively for ContractorUK.  

'Mistake'

But “it would be a mistake to see this [heightened employer caution] as an obvious big downturn,” says Mr Carberry, the confederation’s chief executive. 

“Businesses are under pressure, but still need to hire,” he said. “[But] they are making more deliberate decisions about staffing need”. 

Following the report’s publication, Mr Carberry added that candidates, too, are “considering [their] options”.  

In fact, many candidates would like to move to secure better pay, he outlined in a LinkedIn post, but they are “cautious about the risks they take in the face of economic uncertainty.” 

'Looming recession now impacting hiring'

Claire Warnes, a partner at KPMG reflected: “The looming recession is clearly impacting the UK jobs market.  

“Employers’ caution in hiring combined with fewer available candidates has resulted in the number of permanent placements falling for the first time in nearly two years.”  

Specifically in tech however, the permanent market is noticeable for its long list of candidate shortages (even though decision-making timelines on full-time roles extended last month). 

'Struggling to hire'

In “short supply” in October for permanent positions were Analysts, Data Engineers; Data professionals, Developers, Infrastructure personnel, Software Engineers, Technical Sales staff, and Technology/Digital/ IT applicants.  

The temporary market was similarly scarce of Data professionals, Developers and IT/Technology workers, on top of a lack of freelance Automation Testers and Software contractors. 

“It remains the case that firms in many sectors are struggling to hire,” said the REC’s Mr Carberry, pointing to where the confederation’s member firms struggled to hire last month. 

Ahead of the chancellor’s announcements on Thursday, he added: “We’re looking to the Autumn Statement later this [week] to help with removing the brakes on growth by reforming the Apprenticeship Levy to build a more effective skills system, improving support to help people move from inactivity to work, and align other policy areas – like work permits – with a growth strategy.”