Report on Jobs: Permanent placements decline at slowest rate in a year

• Slower fall in permanent placements
• Starting salaries close to stagnation in September
• Demand for staff falls and candidate supply rises rapidly

Summary

The latest KPMG and REC, UK Report on Jobs survey, compiled by S&P Global, revealed a further, albeit softer, decline in the recruitment of permanent staff at the end of the third quarter. Low employer confidence and cost concerns weighed on staff hiring, according to survey participants.

Vacancies data meanwhile highlighted a marked drop in demand for staff that was similar to that seen in August. The sustained fall in hiring and reports of redundancies drove a further rapid increase in candidate numbers for both permanent and temporary positions. The shift in demand and supply for workers placed downward pressure on pay, with both permanent salaries and temp pay rates up only marginally.

The report is compiled by S&P Global from responses to questionnaires sent to a panel of around 400 UK recruitment and employment consultancies.

Downturn in permanent staff hiring eases in September

September survey data signalled a weaker drop in permanent staff appointments across the UK, with the latest reduction the softest seen for a year. That said, the rate of decline was sharp overall, with firms often noting that employers were hesitant to take on new workers due to weaker economic conditions and cost concerns.

Temp billings meanwhile fell at a solid pace that was quicker than in August.

Starting salaries rise only fractionally

Starting pay for permanent workers rose negligibly in September, with the rate of growth the weakest seen since the current run of pay inflation began just over four-and-a-half years ago. The near-stagnation of salaries coincided with reports of weaker demand for workers and reduced hiring budgets. Temp pay growth also eased in September, with wages increasing only slightly overall.

Demand for staff falls

Overall vacancies across the UK continued to fall markedly at the end of the third quarter. Moreover, the rate of contraction eased only slightly from August's six-month record. Underlying data indicated that demand for permanent workers continued to decline at a steeper rate than for short-term staff.

Candidate availability continues to rise sharply

Reduced recruitment activity and redundancies were linked by survey respondents to a further sharp increase in the availability of workers in September. This was despite the rate of expansion slowing from August's post-pandemic record. The supply of both permanent and temporary staff increased at softer, but similarly marked rates.

Regional and Sector Variations

Regional data highlighted that placements fell at slower rates in the South and North of England, which offset steeper declines in London and the Midlands.

Trends diverged by region, with billings falling markedly in the South of England and London, but increasing in the Midlands and North of England.

Nine of the ten monitored job categories registered lower demand for permanent staff during September. The Retail and Hotel & Catering sectors saw by far the steepest rates of contraction. Meanwhile, demand for permanent workers rose slightly across the Engineering sector.

Temporary vacancies declined across most monitored job sectors in September, with Retail seeing the most pronounced drop overall. At the same time, demand for short-term workers improved across the Blue Collar and Engineering categories.

Comments

Commenting on the latest survey results, Jon Holt, Group Chief Executive and UK Senior Partner KPMG, said:

“With very little positive news out there on the economy in recent months, and lots of speculation about the Budget, it is understandable that employers are cautious with their hiring. But despite these headwinds, our annual CEO Outlook revealed this week that chief executives are more upbeat about future growth prospects for their industry and the UK economy than might be expected. They are resilient and responding to challenges by adapting their investment strategies to focus on AI adoption, managing cyber risk and upskilling their talent.

“The jobs market has not yet turned a corner and remains tough, but we saw stabilisation in some of the numbers last month. While the public finances provide little room for manoeuvre in November, some clear signals from the Chancellor that build on business confidence will hopefully support renewed hiring as we head into 2026.”

Neil Carberry, REC Chief Executive, said:

“Recruiters have been reporting a trend towards stabilisation in the permanent job market since the summer, and today’s data back that up for September. The temporary market remains somewhat healthier, with growth in some regions. We can hope that the jobs market and the economy may be moving towards calmer waters, but falling vacancies is a reminder that what is really needed is a shot of confidence in the wider economy to get things going.

“Pay trends remain subdued where pay is set by the market rather than the Government. This suggests that pay growth should not be a drag on the Bank of England’s upcoming interest rate decision.

“The economic picture is still challenging for employers, with pressures beyond their control. A genuinely pro-business, pro-growth Autumn Budget next month could provide much-needed relief, by avoiding unaffordable tax rises on business, committing to real practicality on the Employment Rights Bill, supporting flexible work and reforming public sector hiring.”

Methodology

The KPMG and REC, UK Report on Jobs is compiled by S&P Global from responses to questionnaires sent to a panel of around 400 UK recruitment and employment consultancies. 

Survey responses are collected in the second half of each month and indicate the direction of change compared to the previous month. A diffusion index is calculated for each survey variable. The index is the sum of the percentage of ‘higher’ responses and half the percentage of ‘unchanged’ responses. The indices vary between 0 and 100, with a reading above 50 indicating an overall increase compared to the previous month, and below 50 an overall decrease. The indices are then seasonally adjusted.

Underlying survey data are not revised after publication, but seasonal adjustment factors may be revised from time to time as appropriate, which will affect the seasonally adjusted data series.

For further information on the survey methodology, please contact economics@spglobal.com.

Full reports and historical data from the KPMG and REC, UK Report on Jobs are available by subscription. Please contact economics@spglobal.com.

About KPMG UK

KPMG LLP, a UK limited liability partnership, operates across the UK with approximately 17,000 partners and staff. The UK firm recorded a revenue of £2.99 billion in the year ended 30 September 2024.  

KPMG is a global organisation of independent professional services firms providing Audit, Legal, Tax and Advisory services. It operates in 143 countries and territories with more than 275,000 partners and employees working in member firms around the world. Each KPMG firm is a legally distinct and separate entity and describes itself as such. KPMG International Limited is a private English company limited by guarantee. KPMG International Limited and its related entities do not provide services to clients. 

About REC

The REC is the voice of the recruitment industry, speaking up for great recruiters. We drive standards and empower recruitment businesses to build better futures for their candidates and themselves. We are champions of an industry which is fundamental to the strength of the UK economy. Find out more about the Recruitment & Employment Confederation at www.rec.uk.com.

About S&P Global

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