Jobs market cools further over economic concerns and rising costs
Growth in starting salaries also slowed to its lowest level for more than four years as firms tightened their recruitment budgets.
The monthly KPMG and REC report on jobs showed a 'further steep decline' in permanent staff appointment in July.
The influential report showed a reading of 40.0 for permanent placements in the UK, improving slightly from 39.1 in June.
However, any figure below 50 represents decline in the job market, with levels over 50 showing growth. The data therefore indicated another month of contraction.
Jon Holt, group chief executive and UK senior partner at KPMG, said: 'The labour market cooled in July as chief execs held back from increasing their recruitment budgets.
'Economic uncertainty, the complexities of AI adoption and global headwinds are all weighing on business planning.'
Recruiters frequently said in the survey that weak confidence about the economy and 'increases in payroll costs' were factors causing the drop in hiring.
It pointed towards a 'steady' jobs market in certain sectors, such as engineering, but flagged a continued drop in hiring in retail and hospitality.
Meanwhile, starting salary inflation slowed for a second month in a row to its lowest level since March 2021.
The data comes after the Bank of England pointed towards slowing wage growth over the coming year while the unemployment rate could tick higher.
Kate Shoesmith, REC deputy chief executive, said: 'There is a path to jobs market recovery – but it will take co-ordinated action from Government, the Bank of England and businesses to maximise on any potential upswing.
'With starting salaries and temporary pay rising only modestly, it was right to cut interest rates last week.
'More action like this, to stabilise the business cost-base, is what will support growth and boost the jobs market this year.'
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