Permanent and temporary appointments in the UK have fallen at the fastest rate in three years, new figures have shown.

Permanent placements decreased for the first time in six months during June, while temporary and contract staff billings continued a seven-month slide, according to the latest Report on Jobs from the Recruitment and Employment Confederation (REC) and KPMG.

London, the Midlands and the north of England all registered lower placement volumes last month, with only the south bucking the trend by posting growth.

The survey of 400 recruitment consultancies found that overall, pay rates had stagnated and there had been an increase in the number of staff available to work.

There was also a mixed picture across industries. The IT and medical sectors reported the strongest demand for permanent and temporary staff respectively. But demand for workers in the hotel and catering sector saw the greatest decline.

REC chief executive Kevin Green described the sharp drop in the number of people placed in work last month as “really disappointing”.

“A decrease in hiring activity means we could see a period of increased unemployment, especially as a new wave of school leavers and graduates will be entering the labour market over the summer,” he said.

“I expect as we continue to make slow progress out of recession that we’ll see this kind of a zig-zag pattern with some good months followed by weaker ones – rather than sustained periods of uninterrupted jobs growth.

“But it’s also important to note that the picture is not uniform across all industries. If you are a skilled engineer, IT professional or in nursing or secretarial work there is still increasing demand for you from employers.”

Bernard Brown, partner and head of business services at KPMG, added: “We must remember that these figures have come on the back of months of uncertainty in the Eurozone, the Greek elections and a worsening debt position in southern Europe. This has dented confidence and created nervousness around investment, which in turn has impacted job creation.”

But he warned that the number of unemployed people in the UK could hit three million if the trend continued to accelerate at its current pace.