UK Job Market: Signs of Stabilisation Amid Continued Caution
Permanent placements: Decline eases after a tough year
Permanent hiring fell again in September, but at the slowest rate in 12 months, suggesting some stabilisation after a long period of decline. Recruiters cite employer caution, driven by weak economic conditions and cost concerns, as the main reason behind muted hiring activity.
“The jobs market has not yet turned a corner and remains tough, but we saw stabilisation in some of the numbers last month.”
Jon Holt, Chief Executive and UK Senior Partner, KPMG
Temp billings: Sees further decline
Temporary hiring remained subdued, with the Temporary Billings Index at 46, indicating ongoing contraction, although some regions, such as the Midlands and North, showed pockets of growth.
Vacancies and demand: Still weak, but the pace of decline is slowing
Total UK vacancies continued to fall sharply in September, with the Vacancies Index at 43, consistent with two years of decline. However, this represents only a slight change from August, hinting that the downturn may be bottoming out.
Permanent vacancies dropped faster than temporary ones, reflecting businesses’ preference for flexibility while uncertainty remains. The ONS also reported that total vacancies dropped to 728,000 among the lowest since early 2021.
Pay and salaries: Growth nears stagnation
Starting salaries for permanent hires were almost flat in September, the weakest pay growth since 2021. With candidate availability rising sharply and hiring budgets tightening, wage pressures are easing. Temporary pay also grew only slightly, marking an eight-month low in wage inflation.
This easing in pay growth, especially in the private sector, could be good news for the Bank of England as it weighs interest rate decisions.
Candidate supply: Rapid growth continues
The number of available candidates rose for the 31st consecutive month, with the Total Staff Availability Index at 65.4. Recruiters linked this to redundancies and reduced hiring, which continue to release skilled professionals back into the market.
Sector snapshot
- Engineering bucked the trend, showing slight growth in demand for permanent staff.
- Retail and Hospitality continued to see the steepest declines in both permanent and temporary vacancies.
- Blue Collar and IT roles saw some improvement in short-term hiring
What it means for recruiters
For recruitment consultants, the message is clear: the market remains challenging, but there are flickers of opportunity. Clients are still hiring, just more selectively. This environment rewards recruiters who can provide strategic guidance, market intelligence, and advisory insight to cautious employers.
As REC Chief Executive Neil Carberry noted:
“Recruiters have been reporting a trend towards stabilisation in the permanent job market since the summer, and today’s data back that up… What is really needed is a shot of confidence in the wider economy to get things going.
“In a job led market, most recruiters can make money, but when the going gets tough, it creates opportunities for those that are really great at their job. It also highlights the strength of their relationships with clients. It’s all about building trust and a deep understanding of exactly what the clients’ needs and wants are.
Starting a new business in a tough market is a great opportunity, why? For exactly the reasons above, hard work pays off and those that have great relationships will always prosper. I’ve seen many successful businesses, that had their start during challenging market conditions and are now thriving.
Ashley Lyas, Director QUBA SolutionsIt’s like anything in life, you can always have an excuse why not to do something but 99% of our agencies say to me, that they now wish they’d started up years ago and not waited. I would urge that experience is key and therefore, I would recommend that 3-5 years in the recruitment market is essential, for any recruiter looking to venture out on your own.”
Looking ahead
KPMG’s CEO outlook shows that business leaders are feeling more optimistic about the long-term future, with many investing in AI, cyber resilience, and upskilling. A pro-growth Autumn Budget could be the catalyst needed to re-energise hiring as we move into 2026
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Disclaimer: This article is for general information only and should not be taken as financial or recruitment advice.
Source: KPMG and REC, UK Report on Jobs (UK) 10 October 2025
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