The latest report from the Recruitment Employment Confederation (REC) and Deloitte shows a gradual cooling of the labour market with candidate demand being met.

Greater numbers of migrant workers are thought to have eased the supply shortage. Although growth remained robust, recruitment consultancies reported that July's increase in demand was the least marked in twenty-two months.

Commenting on the latest report, Ashley Unwin, consulting partner at Deloitte said:

"Cooling demand for staff across sectors has eased pressure on pay, with average increases now at 4.1%. However, the impact of the Olympic win can already be seen in some areas, with growth in the construction and service sectors already apparent.”

Marcia Roberts, Deputy Chief Executive of the REC said: "For the fourth month in a row the UK manufacturing sector continued to shed jobs, but last month saw the largest fall for over two years. The widespread skills shortage of previous months is less evident as larger numbers of migrant workers and seasonal workers enter the job market and are placed by recruiters.

“Although growth in demand for both permanent and temporary workers continues to level out, we must not lose sight of the fact that there has now been continuous growth for over two years. Even with the continued decline in manufacturing, the UK labour market remains in good health, with a particularly strong showing for employment growth in the service sector last month.”