Following the summer season, we’re pleased to share our latest labour market update. As participants in the REC/KPMG UK Jobs panel, we continue to contribute to the research compiled by S&P Global, alongside reviewing Indeed Hiring Lab’s insights into job advertising and hiring trends.
In our August update, we highlighted an important turning point: permanent placements had stabilised nationally after 45 months of decline, while temporary recruitment continued to grow.
Since then, permanent hiring has edged forward, with modest increases in both August and September. However, the stronger temporary recruitment seen over the summer has lost some momentum, pay growth has eased and employers remain cautious about committing to additional headcount.
The picture is one of gradual, uneven improvement, with geopolitical uncertainty, energy costs and the forthcoming Budget continuing to influence business confidence.
📈 Permanent Hiring Builds on the Summer Turning Point
Following July’s stabilisation, permanent placements increased nationally in August for the first time in almost four years. September brought a second consecutive rise, with growth reaching its strongest rate since September 2022, although still only marginal.
Recruiters linked the improvement to increased business activity, expansion plans and greater confidence among some employers. Recruitment freezes and cautious hiring decisions elsewhere continued to limit progress.
The regional picture remains mixed:
- London: Permanent placements increased for a third consecutive month, but the pace slowed considerably from July’s strong rebound.
- South of England: Permanent placements continued to fall, with September’s decline slightly sharper than August’s. The region remains behind the national improvement.
The summer turning point has therefore developed into modest national growth, but has yet to become a consistent recovery across all regions.
🚀 Temporary Hiring Continues, but Momentum Eases
Temporary billings increased nationally for a sixth consecutive month in September. However, growth slowed to its weakest pace in that six-month period.
This marks a change from the stronger temporary recruitment reported over the summer. Some recruiters continued to see demand linked to new projects and short-term requirements, while others reported fewer vacancies or employers choosing permanent appointments.
London recorded a sharp fall in temporary billings, ending four consecutive months of growth. Across the South, billings continued to rise, but much more slowly than in August.
For HR teams, interim and fixed-term appointments remain useful options for covering absence, delivering change and providing specialist support. However, the latest figures suggest that temporary recruitment is also subject to tighter budgets and more selective hiring decisions.
📊 Vacancies Show Improvement, but Demand Remains Subdued
Overall vacancies continued to decline nationally in September, although at their weakest rate in just over two years.
An encouraging development was the first increase in permanent private-sector vacancies for more than two years. However, permanent and temporary vacancies across the market as a whole still fell.
London’s permanent vacancies increased for a sixth consecutive month, while demand for temporary staff declined. Across the South, permanent vacancies continued to fall, although at their slowest rate in two-and-a-half years.
Indeed’s September snapshot reinforces the cautious picture. UK job postings fell 1.5% in the month to 18 September, remaining 31% below their February 2020 baseline and 8.1% lower than a year earlier. Hiring demand has been broadly stable since June, rather than showing a substantial rebound.
These measures capture different aspects of recruitment: a modest increase in completed placements can sit alongside subdued advertising and falling vacancy numbers.
👥 Candidate Availability Remains Strong
The availability of permanent and temporary candidates continued to increase sharply in September. Recruiters cited redundancies and fewer job opportunities as contributing factors.
However, overall candidate supply grew at its slowest pace in three years, driven by a softer increase in permanent candidate availability. Temporary candidate supply increased more quickly nationally.
London recorded the weakest increases in both permanent and temporary candidate availability among the four monitored English regions. Across the South, the supply of workers continued to rise markedly.
For employers, this creates access to a broad talent pool. However, competition for highly skilled and specialist candidates remains, so increased availability does not mean every appointment will be straightforward.
💷 Pay Growth Softens After the Summer
Our previous update highlighted strengthening starting salaries and temporary wages. That momentum continued into August, but eased in September.
Permanent starting salaries increased nationally, although growth slowed for the first time in four months and remained below its historical average. Temporary wage growth also moderated, reaching a four-month low.
Both London and the South recorded slower increases in starting salaries. The South saw the weakest permanent salary growth of the four monitored English regions.
Indeed’s advertised wage growth remained at 4.0% year on year in August, broadly unchanged over the previous six months.
Pay is therefore still increasing, but cost considerations and greater candidate availability are reducing some of the upward pressure.
🌍 What Is Keeping Employers Cautious?
The latest commentary points to a combination of geopolitical uncertainty, energy-price concerns, borrowing costs and a desire for clearer government policy ahead of the Budget.
Jon Holt, Group Chief Executive and UK Senior Partner at KPMG, describes the current improvement as “a fragile recovery”. He highlights uncertainty around energy prices and higher borrowing costs, with businesses looking to the Budget for greater clarity on tax policy and conditions that support investment.
Maxine Bligh, Interim Chief Executive at the REC, similarly notes: “The geopolitical backdrop remains challenging for government and business alike.” Her message is that stronger business confidence will be needed to sustain the recent improvement in hiring.
These pressures help explain why some employers are progressing essential recruitment while delaying wider expansion. They provide context for the cautious market, rather than suggesting that every sector or organisation is experiencing the same conditions.
🤖 AI Skills Continue to Influence Hiring
Indeed reports that 9.7% of UK job postings mentioned AI at the end of August, compared with 4.9% a year earlier.
AI-related requirements are also increasingly appearing outside traditional technology occupations.
For HR leaders, this continues to raise practical questions about job design, skills development, workforce planning and the support managers need as technology changes how work is delivered.
💡 What This Means for Employers and HR Leaders
The summer brought the first signs of a turning point, and September’s figures suggest that some of that progress has continued. Permanent placements are growing modestly and the decline in vacancies has eased.
However, temporary recruitment has slowed, London’s summer momentum has weakened and the South remains subdued. It is too early to describe this as a sustained recovery across the market.
For employers and HR leaders, the priorities remain practical:
- Plan around business needs: Be clear about essential appointments and the capability required to deliver them.
- Make the most of available talent: There are experienced candidates in the market, but specialist skills still attract competition.
- Keep recruitment moving: Clear briefs, timely feedback and realistic packages remain important.
- Build capability alongside hiring: Retention, development and effective use of technology deserve continued attention.
For those seeking their next role, the modest improvement is welcome, although competition remains strong and the pace of hiring varies considerably.
The next few months will show whether the progress made since the summer can develop into broader employer confidence and more consistent recruitment activity.
Sources:
KPMG & REC UK, London and South of England Reports on Jobs, compiled by S&P Global — August and September 2026 survey data, published in September and October.
Indeed Hiring Lab — UK Labour Market Snapshot, 28 September 2026.
KPMG and REC commentary accompanying the October Report on Jobs.