The KPMG and REC, UK Report on Jobs survey, compiled by S&P Global, revealed a further decline in the recruitment of permanent staff at the end of the third quarter. According to the update from KPMG UK, relatively low employer confidence and cost concerns weighed on staff hiring (as revealed via a survey sent to participants).

As noted in the update from KPMG, vacancies data meanwhile highlighted a significant decline in demand for staff members that was somewhat similar to that seen in August.

As stated in the latest jobs report, the sustained drop in hiring activity as well as reports of redundancies drove a further “increase in candidate numbers for permanent and temporary positions.”

According to the update from KPMG UK, the shift in demand and supply for workers placed downward pressure “on pay, with permanent salaries and temp pay rates up only marginally.”

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

September survey data signaled a relatively weaker drop in permanent staff appointments across the UK, with the “latest reduction the softest seen for a year.”

But the rate of decline was sharp overall, with companies noting that employers had been hesitant to take on new workers “due to weaker economic conditions and cost concerns.”

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

Starting pay for permanent workers rose “negligibly” during the past month 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 last month, with wages “increasing only slightly overall.”

Overall vacancies across the United Kingdom 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 suggested that the demand for permanent workers “continued to decline at a steeper rate than for short-term staff.”

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 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.”

Meanwhile, demand for short-term workers “improved across the Blue Collar and Engineering categories.”

Jon Holt, Group 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.”

They added:

“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.”

They also mentioned:

“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 obtained 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.”