The jobs market is getting worse, with permanent posts falling at the fastest rate for years and the growth in temporary work becoming weaker, according to a new report.

Research by the Recruitment and Employment Confederation (REC) and KPMG among 400 recruitment and employment firms showed demand for staff continued to fall last month.

Permanent jobs fell at the fastest rate since the end of 2001, while growth in temporary work was the weakest for over five years, the study showed.

Lower demand for staff and an increasing number of candidates looking for work fed through to wages, which also showed weaker growth, said the report.

Alan Nolan of KPMG said: “This is yet another worrying set of statistics, confirming that the financial crisis continues to deepen.

“Particularly concerning is the construction sector, which usually shows a strong requirement for temporary labour.

“This sector has weakened dramatically over the first half of the year, caused in the main by a dramatic fall in construction output through the lack of new housing projects.

“Cost reduction programmes remain at the top of the boardroom agenda with business leaders remaining extremely cautious about taking on permanent staff.”