Starting salaries for people placed in permanent jobs during March increased to their highest levels since July 2007, with jobs in IT attracting among the highest pay growth.

The monthly REC/KPMG Report on Jobs recorded the growth, which was matched by a steeper decline in candidate availability, meaning the ongoing skills shortage is getting worse.

Recruitment consultants surveyed for the report said permanent staff availability fell at the sharpest rate since October 2004, while the latest drop in temporary/contract staff availability was the fastest in almost 10 years.

Bernard Brown, partner and head of business services at KPMG, said: "Marginally up on the figures for February, the latest data suggests that engineering, construction and IT are the sectors hungriest for talent."

He said: "It's particularly encouraging to note that employers are focusing on full-time employment, with more organisations offering contracts for permanent positions than temporary roles over the past month.

"It appears that employers are attempting to encourage candidates to move away from the short-term mentality of temporary roles by raising the bar with the starting salaries aligned to permanent positions. The data shows 'offer salaries' picking up at their sharpest pace for almost seven years."

The IT jobs and skills most in demand during March were business analysts, digital media, e-commerce, Java, .Net, PHP, software developers and web developers.