Demand for permanent staff has fallen, according to a report by KPMG and REC.

The UK Report on Jobs found uncertainty over the economic outlook and rising costs continued to weigh on hiring decisions in September.

Permanent placements fell again, as companies were often reluctant to commit to recruiting permanent staff, but the rate of decline was the weakest in three months.

The availability of candidates improved in September for both permanent and temporary labour, with recruiters often linking this to redundancies.

Pay pressures continued to weaken. Starring salaries for permanent staff fell to a two-and-a-half-year low, with wages for temporary staff hitting a 31-month low.

While competition for skilled workers and the higher cost of living continued to place upward pressure on pay, there were some reports of greater strain on clients' budgets.

Overall, total vacancies fell slightly in September, marking the first fall in overall demand for staff since February 2021.

Permanent staff vacancies increased in five of the 10 broad employment categories during September, led by hotel and catering. The steepest reductions in permanent labour demand were seen in the retail and construction sectors.

Demand for temporary staff rose in five of the 10 employment sectors covered by the survey. Nursing/ medical/ care registered the strongest rise in vacancies overall, with a sharp fall in demand for retail and executive/ professional workers.

Claire Warnes, partner, skills and productivity at KPMG UK, said: "A concerning feature of this month's data is that demand for staff is losing momentum, with total vacancies falling for the first time since February 2021 amid a fresh reduction in permanent vacancies. While both reductions are slight, employers are clearly nervous due to the long-term economic uncertainty and budget constraints that are impacting businesses everywhere. This in turn is leading to a continued reliance on temporary staff.

"For several months, strong pay growth has been a consequence of a tight labour market. But strains on employers' budgets are now affecting the rate of starting salary inflation, which is at a two-and-a-half-year low, while temporary wages increased at the slowest rate in 31 months.

"Skill shortages across a range of sectors - from permanent IT staff to temporary nursing roles - also continue to be an area of long-term concern for the economy."