QUBA Solutions: UK Recruitment Market Snapshot - March 2026

The latest data from S&P Global, KPMG and the REC suggests the UK recruitment market may be approaching a turning point.

Hiring demand remains subdued, but the pace of decline is slowing and several sectors are showing early signs of stabilisation. At the same time, new economic developments including the UK’s recent Spring Statement and geopolitical tensions affecting energy markets, could influence employer confidence in the months ahead.

Below we break down the latest signals shaping the UK recruitment market.

Hiring slowdown begins to stabilise

The most recent KPMG/REC UK Report on Jobs indicates that recruitment activity is still soft but the decline is easing.

Permanent placements fell again in February, but only marginally, marking the slowest decline since March 2023.

Temporary billings also dipped, reflecting continued caution among employers, although the contraction was modest compared with the broader downturn seen during 2025.

Demand for staff remains under pressure. Vacancies have now fallen for 28 consecutive months, though the pace of decline slowed to its weakest level in nine months.

For recruiters, this suggests a market that is still cooling but no longer deteriorating at the same pace.

Candidate availability continues to rise

Another notable trend is the increase in candidate supply.

Recruitment consultancies reported a sharp rise in candidate availability, particularly among permanent workers.

This reflects a combination of factors:

• corporate restructuring and layoffs in some sectors
• professionals becoming more open to moving roles
• employers delaying hiring decisions amid economic uncertainty

For agencies, this creates a more candidate-rich market, but also one where converting vacancies into placements can take longer.

Services sector remains resilient

The UK’s largest economic sector: services - continues to expand.

The S&P Global UK Services PMI Business Activity Index recorded 53.9 in February, signalling the tenth consecutive month of growth.

Businesses reported gradually improving demand and stronger domestic orders. However, hiring activity has not kept pace with output.

Many firms are maintaining hiring freezes or replacing fewer leavers, largely due to ongoing cost pressures.

This dynamic ‘growing activity but cautious hiring’ is a key theme recruiters are seeing across professional services and corporate sectors.

Construction demand remains weak

In contrast, the construction sector continues to struggle.

The UK Construction PMI fell to 44.5 in February, indicating another decline in activity and extending the sector’s downturn to fourteen consecutive months.

Residential building has been particularly weak, while commercial construction and civil engineering also declined.

However, there are signs that business optimism is improving, with many firms expecting infrastructure and energy projects to support future activity.

Manufacturing showing early improvement

Manufacturing conditions globally have begun to improve slightly.

The Global Manufacturing PMI rose to 50.9, indicating modest expansion and the strongest production growth since mid-2024.

This suggests that industrial demand may slowly strengthen through 2026, which could support recruitment in engineering and technical sectors.

Economic backdrop: Spring Statement signals modest growth

Alongside the labour market data, the UK’s 2026 Spring Statement paints a picture of cautious economic progress.

The latest forecasts suggest UK GDP growth of around 1.1% in 2026, lower than previous projections, while unemployment is expected to peak at roughly 5.3% before gradually declining later in the decade.

For recruitment agencies, this implies a steady but unspectacular hiring environment, where employers remain cautious about expansion while waiting for stronger economic momentum.

The Statement also reinforced that the labour market is likely to soften slightly in the near term before improving later in the decade.

Global tensions could add cost pressures

Another factor influencing employer confidence is the ongoing conflict involving Iran, which has pushed energy markets into uncertainty.

Oil prices have surged above £75 per barrel, raising concerns about higher fuel and energy costs for businesses.

The UK government has said the country currently has sufficient oil and gas supplies, but ministers acknowledge that a prolonged conflict could still affect businesses and households through rising prices.

Higher energy costs could ultimately feed into inflation, business operating costs and hiring decisions, particularly in energy-intensive industries.

What this means for recruiters

Taken together, the latest economic and labour market data suggests the UK recruitment market is transitioning from contraction toward stabilisation.

Key trends recruiters should watch:

• Hiring demand remains cautious but is no longer deteriorating rapidly
• Candidate availability is increasing across many sectors
• Services remain the most resilient part of the economy
• Construction continues to struggle, though confidence is improving
• Manufacturing demand may begin to strengthen gradually

However, macroeconomic factors, from government fiscal policy to global energy markets, will continue to influence employer confidence through 2026.

For recruitment agencies, the environment is likely to reward sector focus, financial resilience and strong client relationships.

Stay ahead of the recruitment market

Understanding the wider economic landscape is key to making confident business decisions.

At QUBA, we work exclusively with recruitment agencies, supporting them with funding, operational support and technology designed for the way recruiters work.