The demand for workers rose at its fastest rate in May for more than 23 years, according to the UK Report on Jobs commissioned by KPMG and REC. The report found that the easing of lockdown restrictions and re-opening of various sectors spurred a marked increase in hiring activity last month.

Permanent staff appointments rose at a record pace, while temp billings growth was also historically sharp. At the same time, the deterioration in staff supply intensified, with overall candidate availability declining at the quickest rate since May 2017.

Lower staff supply and rising vacancies led to further increases in starting pay, with both starting salaries and temp pay expanding at sharper rates than in April.

The report was compiled by IHS Markit from responses to questionnaires sent to a panel of about 400 UK recruitment and employment consultancies.

Lower worker availability was frequently linked to lingering pandemic uncertainty and a subsequent reluctance to seek out new roles, fewer EU candidates and furloughed staff.

Demand for permanent workers rose across all 10 monitored job categories during May. The steepest increases in vacancies were seen in IT and computing and hotel and catering. Retail, meanwhile, saw the softest expansion in demand. On the other hand, for business who are looking to find their ideal employees, services like external recruiting can be utilized.

Claire Warnes, partner and head of education, skills and productivity at KPMG UK, said: “With demand for workers in May increasing at the fastest rate in 23 years, the jobs market seems to be firing on all cylinders, and we need this momentum to continue for our economy and businesses to fully bounce back.

“But the deterioration in staff supply intensified this month, with overall candidate availability declining at the quickest rate since May 2017. This is a worrying trend and the message is clear: we need businesses and recruiters working alongside government to urgently address the skills gap by supporting candidates and employees to upskill and reskill to move into new roles. This will be crucial to our recovery from the pandemic and the levelling up of opportunities across the UK.”