As we approach the end of 2025, the UK labour market remains subdued but is showing the first signs of stabilisation in certain areas. Insights from the KPMG and REC, UK Report on Jobs (compiled by S&P Global), the REC’s latest commentary, and Indeed Hiring Lab data reveal a picture of ongoing caution from employers, balanced by a small uptick in temporary hiring activity.
📉 Permanent Placements Still Falling, But the Slowdown Eases
The KPMG and REC, UK Report on Jobs shows that permanent staff appointments declined again in October, although the rate of contraction was the softest in 15 months.
Employers continue to cite economic uncertainty, cost control, and low confidence as reasons for holding back on new hires.
By contrast, temporary billings rose for the first time since mid-2024, suggesting organisations are relying more on short-term or flexible support as they navigate budget constraints ahead of the Autumn Budget.
Candidate availability increased at a rapid pace across both permanent and temporary markets, driven by redundancies and reduced hiring volumes while starting salaries and temp pay rates rose only slightly.
📊 Indeed Data Points to Continued Cooling in Demand
According to the Indeed Job Postings Index, UK job postings remain below their mid-2024 levels, indicating softer hiring intent across most professional sectors.
Postings overall are around 15–20% lower than their 2024 peak, but still above pre-pandemic benchmarks (index ≈ 175 vs 100 in February 2020).
This shows that while hiring demand has cooled, labour market activity remains higher than historic norms, reflecting ongoing replacement hiring and workforce adjustments rather than expansion.
🧭 ONS Data: Labour Market Loosens Further
The latest ONS labour market figures confirm that conditions continue to soften:
- Employment fell by around 32,000 in October.
- Unemployment edged up to 5.0% — the highest rate since early 2021.
- Economic inactivity remains elevated at around 21%.
- Regular pay growth slowed to 4.6% (July–September), signalling weaker pay pressure and limited real-terms gains after inflation.
The REC commented that these data underline the importance of economic measures in the upcoming Budget to help boost hiring confidence and prevent further job losses.
💼 Regional and Sector Trends
There were regional differences in the latest KPMG/REC data:
- Midlands saw the sharpest rise in temp billings.
- London and the South experienced continued softness in permanent hiring.
By sector, Engineering and Accounting/Finance showed modest improvement, while Retail, Marketing, and Hospitality reported the steepest declines.
HR-specific hiring followed the overall professional-services pattern, steady but subdued as many organisations prioritise retention and internal mobility.
🏡 Flexibility and Workforce Planning Stay Front of Mind
Around 15% of UK job adverts still reference hybrid or remote working.
Employers continue to use interim and contract solutions to maintain agility, manage budgets, and secure specialist expertise where needed.
This shift highlights the ongoing importance of flexible hiring models, particularly in a market where permanent recruitment remains cautious.
💡 Implications for Employers
- Hiring activity is stabilising, but confidence remains fragile.
• Candidate supply is rising, offering more choice but also signalling slower movement between roles.
• Pay pressures are easing, creating room for employers to focus on flexibility, culture, and career development as attraction tools.
• Temporary and project-based work continue to provide a vital bridge between uncertainty and recovery.
The UK jobs market is still operating below its 2022–2023 highs, but the recent uptick in temporary hiring and the slowing pace of decline in permanent placements suggest early signs of balance returning.
For People Leaders and HR professionals, this remains a moment to review workforce plans, strengthen retention strategies, and prepare for recovery as confidence rebuilds in early 2026.
Sources:
• KPMG and REC, UK Report on Jobs – November 2025 (compiled by S&P Global)
• REC Labour Market Commentary – November 2025
• Indeed Hiring Lab – UK Employment Figures November 2025
• Indeed Job Postings Index – November 2025