- Permanent placements rose to 50.9 in September, the strongest reading in four years.
- Demand for workers fell at its weakest rate since August 2024.
- IT, computing and engineering were among the strongest areas for hiring, while retail and hospitality lagged.
Britain's jobs market is showing tentative signs of recovery, with permanent staff placements rising at their fastest pace in four years in September, according to the latest KPMG and Recruitment and Employment Confederation (REC) Report on Jobs.
The permanent placements index rose to 50.9 from 50.5 in August. A reading above 50 indicates growth, meaning hiring increased for a second consecutive month.
Temporary billings also increased, reaching 50.9, although the rate of growth was the slowest in five months.
The survey, compiled by S&P Global from responses from around 400 recruitment and employment consultancies, is closely watched as an early indicator of Britain's labour market.
“For the second month in a row we are seeing the jobs market starting to flicker back to life, with businesses increasing their hiring across both permanent and temporary roles,” KPMG group chief executive and UK senior partner Jon Holt said.
But the recovery remains fragile.
Is the UK jobs market finally recovering?
There are encouraging signs, but the wider picture is still mixed.
Overall demand for staff continued to decline in September, although the contraction was the weakest since August 2024. Permanent vacancies also fell at a much slower pace, while permanent private-sector vacancies increased for the first time in more than two years.
The availability of workers continued to rise, however, as redundancies and a shortage of job opportunities pushed more people into the pool of candidates.
The staff availability index fell to 57.2 from 60.6. Although a reading above 50 still represents an increase in available workers, the pace of growth was the slowest in three years.
That combination tells an important story. Employers are beginning to hire again, but there are still plenty of people looking for work and overall vacancies have not yet returned to growth.
Starting salaries for permanent workers also increased at a slower pace than in August. That could offer some relief to Bank of England policymakers watching for signs that domestic wage pressures are feeding into inflation.
Which jobs are in demand?
Technology and engineering are emerging as some of the strongest areas of the recovery.
IT and computing recorded the highest demand for permanent workers, followed by engineering. The trend fits with wider signs of investment in artificial intelligence and technology-related activity across the economy.
Retail and hotel and catering were at the other end of the scale, recording the sharpest falls in demand for permanent workers.
There were also clear regional differences. Three of the four monitored English regions recorded higher permanent placements, led by the North of England. The South was the only region to record a decline.
London, meanwhile, recorded the softest increase in permanent candidate availability, suggesting the supply of workers is behaving differently across the country.
What could derail the recovery?
The biggest question is whether businesses feel confident enough to keep hiring.
Holt described the recovery as fragile, pointing to uncertainty around energy prices and higher borrowing costs as continuing headwinds.
“The signal from the private sector is that it is ready to invest,” he said. “A Budget that gets business confidence moving again is key to keeping that momentum in hiring.”
The UK government is due to deliver its Budget on October 28, giving businesses another major policy event to factor into their plans.
REC interim chief executive Maxine Bligh said employers wanted more than assurances about stability.
“The geopolitical backdrop remains challenging for government and business alike,” she said. “But the Chancellor cannot seize this moment with talk of stability alone. Employers want to hear not just how we deliver stability, but how we go for growth.”
For now, the data suggests Britain's labour market may finally be turning a corner after years of weakness in permanent recruitment.
But with vacancies still falling and the pool of available workers still growing, the September figures look more like the beginning of a recovery than proof that the jobs market has fully recovered.
