The monthly Report on Jobs from KPMG and recruitment industry body REC shows the sharpest growth in demand for permanent IT workers since August 1998.

The IT jobs demand for last month was above the national average for all types of workers in the UK, said KPMG. In addition, temporary vacancies in the IT sector also rose at their quickest rate in 16 years.

The IT skills and jobs most in demand during August were business intelligence, Java, .Net, SQL, PHP, programmers, and project managers.

While spiralling jobs demand was good for workers' salaries, said KPMG, there were problems on the horizon. Heath Jackson, a partner in the CIO advisory practice at KPMG, said: "The gloomy weather towards the end of the month reflected the problem the IT industry is still facing - skills.

"The desperation to fill recruitment holes is leading to continued wage growth, which is creating a market that is both unsustainable and unrealistic. It's a conundrum British business will have to solve quickly because if the job market stagnates the wider impact on performance will end up harming productivity," said Jackson.

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