Highest demand for IT staff in 16 years

But KPMG warns rocketing wages could cause trouble

Demand for IT staff rose last month at the fastest rate since August 1998, according to a KPMG report released today.

The Report on Jobs by KPMG and the Recruitment and Employment Confederation showed a steep increase in calls for IT staff last month, with permanent and temporary vacancies rising at the quickest rate in 16 years.

The report placed IT staff third in its league table ranking demand for staff across nine sub-sectors, with the index score for IT rising from 68.4 in July to 70.4 in August, according to the report.

Heath Jackson, a partner in KPMG's CIO advisory practice, said the report showed that the "technology sector mirrored the sunshine of August".

But he added that the sector is still facing a skills problem, which could create instability.

"The desperation to fill recruitment holes is leading to continued wage growth, which is creating a market that is both unsustainable and unrealistic," he said.

"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."