Job growth accelerated sharply last month, but the UK is developing a “two-speed” labour market as vacancies in the public sector diminish, a monthly recruitment survey has revealed.

The number of permanent placements rose at the fastest rate in 10 months, while temporary staff placements saw the greatest rise since May 2007, according to February’s Report on Jobs from the Recruitment and Employment Confederation (REC) and KMPG.

Recruitment agencies reported improved levels of permanent hires across seven out of eight sectors, with the strongest rise in demand for IT and computing staff, followed by workers in the engineering and construction industries.

By comparison, the nursing, medical and care sector was the only one to record a reduction in demand, in stark contrast to the strong growth seen a year ago.

The monthly survey of 400 UK recruitment and employment consultancies also identified engineers, business analysts, payroll assistants and chefs as jobs where key skills remain in short supply.

Salaries for permanent staff stayed flat, while hourly pay rates for temporary or contract staff only rose modestly, both due in part to the growing number of available candidates, the report said.

Kevin Green, REC’s chief executive, pointed to the contrast between sectors in the labour market, and predicted a slowing in the overall jobs growth recorded last month.

“The UK now has a two-speed labour market,” Green said. “The private sector continues to hire in increasing numbers while the public sector is shedding jobs.

"We anticipate that unemployment will increase over the spring, summer and autumn before very slowly starting to decline at the very end of this year and into 2012.”

Green also highlighted the “scandal” of the one million 16 to 24 year olds not in work or education.

He said: “Young people seem to be excluded from the growing number of vacancies as employers remain conservative, favouring experience over potential.

“REC is calling on the government to unleash the job creation potential of small and medium sized businesses and tackle youth unemployment in its forthcoming enterprise budget,” continued Green.

“A national insurance holiday of at least one year for every young person employed by a smaller company is an obvious win-win for both business and jobseekers.”