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Permanent placements in the UK job market are under pressure and are declining at a record rate, according to new research.

The Recruitment and Employment Confederation (REC) and KPMG's Report on Jobs for August found that the decline in permanent positions amounted to the biggest fall since November 2001.

According to the REC, coupled with the downturn in the wider economy the rapid recline was responsible for dampening salary growth – which is at its lowest value in more than five years.

Kevin Green, chief executive of REC, said: "The deteriorating economy is now having the expected negative impact on the labour market."

But, Mr Green added: "Even in these uncertain times, recruitment consultancies are still seeing continued demand for flexible staffing to meet businesses fluctuating people requirements."

According to the research the number of people placed in temporary jobs by recruitment agencies dropped to its lowest level since 2003.

The health sector was the only one to show greater demand for both permanent and temporary recruits in August when compared with last year's figures.

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