As we close out 2025, the UK labour market remains subdued, but several indicators suggest that conditions may be starting to level out. The latest KPMG and REC, UK Report on Jobs (compiled by S&P Global), alongside REC insights and Indeed Hiring Lab’s 2026 trends preview, paint a picture of a cautious market that is softening but no longer sharply declining. Employers are still hesitant, yet underlying activity continues, particularly within replacement hiring and selective temporary demand.
📉 Permanent Hiring Still Contracting, but Stabilisation Is Emerging
The KPMG and REC, UK Report on Jobs shows another fall in permanent staff appointments in November, extending a long-running trend.
However, the rate of decline is now the weakest in around 18 months, suggesting that the market may be approaching a floor.
Key drivers remain consistent:
- Ongoing economic uncertainty
- Pre-Budget hesitation
- Cost control and headcount justification requirements
- Low business confidence delaying sign-off of new roles
Conversely, temporary billings dipped slightly, but remain much more resilient than permanent hiring. Many organisations continue to use temp and contract support to manage short-term workload peaks or plug gaps without committing to long-term cost.
Candidate availability rose again at a historically strong pace across both permanent and temporary markets, fuelled by restructures, redundancies, and reduced vacancy volumes. Starting salaries continued to rise modestly, though pay growth has clearly cooled from 2022–23 peaks.
📊 Indeed Data Shows Slowing Demand, but the Market Remains Active
Indeed’s latest data set indicates that UK job postings continue to track below mid-2024 levels, reflecting softer hiring intent.
Key points:
- Postings remain well below the highs of the last hiring boom, but activity overall is still above pre-pandemic levels.
- Employers are hiring more selectively, with replacement roles outpacing new growth positions.
- Sectors with cost pressure (retail, hospitality, business support) continue to reduce open vacancies.
Indeed’s 2026 Hiring Trends report also notes:
- Wage growth is stabilising and gradually easing.
- Application volumes per advert have increased significantly year-on-year.
- AI-related skills are appearing more frequently in job descriptions, particularly in professional services.
The trend is clear: demand is cooling, but the labour market is far from stalled.
🧭 REC & ONS Signals: Labour Market Softens but No Sharp Deterioration
REC’s commentary around the Autumn and early Winter hiring period highlights a noticeable “holding pattern” from employers.
Contributing factors include:
- Pre-Budget caution around tax changes
- Anticipation of new employment regulations
- Seasonal slowdown ahead of Christmas
ONS figures continue to show a labour market that is loosening gradually but not dramatically. Unemployment has edged upward throughout the year, while inactivity remains structurally high. Pay pressures continue to ease, reflecting softer hiring demand and increased candidate competition.
💼 Regional & Sector Trends
The latest KPMG/REC data points to a mixed picture across the UK:
Regionally:
- No broad-based uplift in hiring across any UK region.
- Wales and Northern Ireland saw milder drops in vacancy activity compared with other areas.
- London and the South continue to experience persistent softness, particularly in permanent hiring.
By sector:
- Nursing/Medical/Care showed a small rise in temporary demand.
- Engineering and Professional Services remain relatively stable.
- Retail, Hospitality, Marketing and Customer Service continue to see some of the sharpest vacancy declines.
HR hiring mirrors the broader professional landscape: steady, with ongoing replacement needs but far fewer growth-driven roles.
🏡 Flexibility, Hybrid Expectations & Workforce Planning
Indeed’s analysis suggests that flexible work remains a persistent requirement for candidates, even as employers gradually tighten in-office expectations.
Notable trends:
- Hybrid remains referenced in a meaningful portion of adverts, though remote-first roles continue to decline.
- Demand for part-time options is high among candidates – especially within HR – yet supply remains limited.
- Temp and contract usage continues to help organisations maintain agility while navigating uncertain economic conditions.
This aligns closely with what we’re seeing day-to-day across HR recruitment.
💡 Implications for Employers
- Candidate availability is at a multi-year high, giving employers greater choice and stronger shortlists.
• Pay inflation is moderating, reducing pressure on budgets and enabling more balanced conversations around offer packages.
• Hiring decisions remain slow, so role clarity and proactive workforce planning are vital.
• Temporary and project-based hiring will continue to play an important role as organisations balance costs with capability needs.
• Early 2026 may bring a modest uplift once Budget decisions settle and confidence improves.
Despite subdued conditions, the market is functioning – just with greater caution, more selective hiring, and a deeper candidate pool.
Sources
- KPMG & REC, UK Report on Jobs – December 2025 (compiled by S&P Global)
• REC Labour Market Commentary – December 2025
• REC Labour Market Tracker & ONS insights – December 2025
• REC Press Release: Pre-Budget hiring slowdown
• Indeed Hiring Lab – 2026 UK Jobs & Hiring Trends Report
• Indeed Job Postings Index – December 2025