A shortage of candidates is hitting firms’ recruitment plans and starting salaries for full-time and temporary staff have hit record levels, according to a report.

Hiring has continued in recent weeks, although the availability of candidates fell sharply, a survey by the Recruitment and Employment Confederation (REC) and KPMG suggested.

Strong demand for staff and a fall in labour supply drove the sharpest increases in starting pay since the survey began in 1997, said the report.

Many of the 400 recruiters surveyed said a shortage of candidates affected their ability to fill vacancies. Claire Warnes, of KPMG, said: “While it’s encouraging to see hiring activity increase in October, the recovery was at the softest rate recorded in six months due to the ongoing deterioration of candidate availability.

“Unsurprisingly, with the ongoing pressures on our health and care services, demand for temporary nursing and care staff tops this month’s rankings.”

Kate Shoesmith, deputy chief executive of REC, said: “This latest data shows the robust growth in the jobs market continuing. Starting salary growth has reached another record high as shortages continue to bite and companies compete to hire the staff they need.

“But we are starting to see signs that we are moving into a new phase of the recovery, as the initial bounce-back in demand starts to ease. Recruiters tell us that candidates in some sectors and regions have been able to secure a substantial pay rise, but many employers can’t afford to offer this.”