Momentum returns for the UK services economy

However headcount recovery is only just beginning

The October S&P Global UK Services PMI shows that the sector grew again last month. This is the sixth month in a row that the industry is in growth territory and the Business Activity Index is at 52.3.

For the jobs market, and for recruiters, the two most important signals in this month’s report are:

• New work is up again, the second fastest since Oct 2024
• Employment decline is basically flattening out

Those two things combined usually mean one thing for the recruitment world, pent-up hiring that has been paused is now beginning to re-surface.

Domestic demand is driving this, not exports

The report shows that UK clients are signing off again on smaller and mid-sized projects, especially around growth plans and sales support roles. International demand is still weak, as new work from overseas fell again.

“That aligns with what UK recruiters are seeing on the ground, and have been sharing with us that UK clients ARE briefing again… but global head office roles, multinationals and cross-border headcount approvals are still lagging.” Ashley Lyas, Director QUBA

Hiring freeze, hiring pause, hiring return

The PMI report says job cuts are still happening, but only marginally and the slowest pace of reduction in 12 months.

Ashley adds: “Job numbers aren’t suddenly surging, they’re just no longer falling fast. This is usually what labour market “turning points” look like. This is textbook late-cycle recruitment behaviour, demand turns up before headcount does. We normally see that recruiters benefit after a 2–3 months lag.”

Pricing / salary insight: pay is still the core cost pressure

Input prices rose again, and salary pressure is one of the biggest drivers. That matters because even if volumes haven’t yet fully returned, employers are being forced to compete for talent again, via compensation. This increases the likelihood of candidate-led hiring dynamics returning in H1 2026.

What this means for recruitment consultants in practical terms

• Right now: Pipeline the “paused” briefs, those are the fastest to re-activate.
• Focus domestically: Target UK mid-market, especially anything revenue generating – sales, product launch support, growth, customer success etc.
• Forecast for Q1 2026: In the data the future output optimism index hit 68.8, which is the highest since October 2024. That’s a forward hiring signal even if headcount is still technically down right now. This level of confidence is exactly the point in the cycle where clients begin to pre-build hiring plans, not hire aggressively yet.

“You can feel the shift now. Growth is returning, demand is improving, and we’re starting to see employers quietly get ready to hire. October’s PMI suggests the worst of the headcount cuts in UK services is now behind us — which means this is the moment for recruiters to get ready. If you want to capitalise on the first wave of returning demand rather than chase it later, partner with QUBA — we’ll help you scale, structure and monetise that upswing properly.” Ashley Lyas, Director QUBA

Source: S&P Global UK Services PMI® Report