UK recruitment activity weakened again in October as employers delayed hiring decisions amid economic uncertainty and rising costs, according to the latest KPMG and REC UK Report on Jobs.
The survey of around 400 UK recruitment and employment consultancies found a renewed downturn in permanent appointments, following two months of modest growth. Recruiters said businesses had scaled back or postponed recruitment as they weighed uncertainty and higher operating costs.
Permanent and temporary recruitment both decline
Permanent placements fell for the first time in four months and at the second-quickest pace so far in 2026, after May. The South of England saw the sharpest fall, with a solid reduction also recorded in the Midlands. London recorded only marginal growth and the North of England a fractional rise.
Temporary billings also moved below the neutral 50.0 mark for the first time since March. The report described the downturn as modest overall, with recruiters linking it to the completion of existing contracts, fewer new opportunities and weaker confidence among firms considering new projects.
“Economic uncertainty and rising expenses led to a slowdown in hiring decisions and fewer job opportunities.”
KPMG and REC, UK Report on Jobs
Vacancy decline eases, but permanent demand remains weak
Demand for staff continued to fall in October, although the decline was the weakest for 26 months. The Total Vacancies Index rose from 48.5 in September to 48.7. Permanent vacancies fell at a softer pace, while temporary opportunities edged up slightly following a two-month decline.
In the private sector, permanent demand rose modestly, while temporary demand increased only slightly. Demand for permanent and short-term staff continued to fall in the public sector, albeit at slower rates than in September.
Official ONS data cited in the report showed 691,000 vacancies in the three months to September - down 5.1% year on year, or 37,000 roles. This was the lowest number since the three months to April 2021 and, excluding the pandemic period, the lowest since the three months to September 2014.
Candidate supply continues to rise
Candidate availability rose again in October, with the Total Staff Availability Index reaching 59.4, up from September's three-year low of 57.2. The supply of candidates has now increased for 44 consecutive months.
Permanent availability accelerated, with recruiters citing fewer vacancies and higher redundancies. Temporary candidate availability also rose markedly, though at the slowest pace since the current expansion began in March 2023, as fewer contract opportunities added to the effect of redundancies.
Pay growth strengthens modestly
Starting salaries rose at a faster pace in October, although the rate remained below the survey's long-run average. Recruitment consultancies linked the increase to ongoing shortages of suitable, higher-calibre candidates.
Average temporary pay also rose, with the rate of inflation picking up slightly from September. London saw the fastest increase in temporary pay, while the Midlands recorded the softest rise.
Sector picture remains uneven
Permanent demand increased in six of the ten monitored job categories, led by IT & Computing and Engineering. The steepest declines were in Retail and Hotel & Catering. For temporary roles, four sectors recorded higher demand, with Blue Collar roles showing the sharpest increase, while Retail saw by far the steepest deterioration.
Methodology
The KPMG and REC, UK Report on Jobs is compiled by S&P Global from responses to a panel of around 400 UK recruitment and employment consultancies. Data for this report were collected between 12 and 26 October 2026. Index readings above 50 indicate growth compared with the previous month; readings below 50 indicate decline.
