The number of people appointed to permanent jobs across the British economy rose faster last month than at any time since May, 2004.

The latest Report on Jobs survey also showed a robust rise in the number of temporary staff billings, reflecting a further improvement in all-round demand for staff.

Engineering and construction headed the tables in both categories in the survey, published by the Recruitment and Employment Confederation and KPMG.

Gareth Osborne, the REC's managing director, also noted a significant leap in the number of executive and professional job placements in an increasingly strong and confident labour market.

Renu Birla, people services director at KPMG in Birmingham, commented: "This month's figures show continuing growth in both permanent and temporary placements, but even this has not stemmed the demand for staff.

"Skills shortages continue to be seen, with the result that employers are paying more for quality candidates, resulting in robust pay inflation.

"The figures are at odds with the rising official unemployment figures, which suggests that labour is available, but not with the skills required."

He suggested that anti-age discrimination legislation, coming into force in October could begin to address this lack of suitable candidates.

Employers are often reluctant to take on older workers. They are perceived as more likely to take sick leave, have more accidents and lower productivity, while younger workers are perceived to lack skills and experience.

Inflation of permanent staff salaries accelerated last month to the highest rate in 15 months.