Permanent hiring falls back to 46.6 in October, while the pay needed to land scarce staff keeps rising

Britain’s recruiters placed fewer people into permanent jobs in October, ending the short run of growth that had built through the summer. The permanent placements index in the KPMG and Recruitment and Employment Confederation Report on Jobs, published on Monday, fell to 46.6 from 50.9 in September, dropping back below the 50 mark that separates growth from contraction. It was the first fall in four months, the lowest reading since May, and the second quickest contraction recorded in 2026.

Temporary work turned down at the same time. The temporary billings index fell to 48.9 from 50.9, its first decline in seven months, as completed contracts and subdued confidence left firms unwilling to commit to new projects. The survey is compiled by S&P Global from the responses of around 400 recruitment and employment consultancies, gathered between 12 and 26 October, in the weeks before the Chancellor’s Budget on 28 October and before the Bank of England raised Bank Rate to 4 per cent last week.

Pay, however, moved against the volumes. Starting salaries for permanent staff rose at a faster pace in October, and average pay for temporary workers also increased more quickly, as consultancies reported employers competing for high calibre candidates who remain in short supply. The report notes that pay inflation on both measures stayed below the survey’s long run averages, even as it strengthened.

Photograph: Robin Stott, via Wikimedia Commons (CC BY-SA 2.0)

Businesses will now be assessing whether the measures announced in the Budget give them enough stability to absorb the external pressures and higher costs they face.Jon Holt, group chief executive and UK senior partner at KPMG

The regional picture split. London’s permanent placements index rose to 51.1 from 50.4, and the north of England held above the growth line at 50.1, down from 53.6. The Midlands fell to 45.0 from 52.1, and the south of England recorded the sharpest drop, to 42.6 from 47.9, as well as the steepest fall in temporary billings. Maxine Bligh, interim chief executive at the REC, said: “There are still signs of the recent resilience in London and the north of England. Both recorded growth in permanent placements.”

Beneath the placements figures, demand weakened only gently. The vacancies index edged up to 48.7 from 48.5, meaning overall demand for workers fell at its slowest rate in 26 months, and permanent vacancies fell at their slowest rate in more than two years. Permanent vacancies rose in six of the ten categories monitored, led by IT and computing and by engineering, with construction and accounting and finance also in growth, while retail and hotel and catering fell most steeply. Candidate availability, meanwhile, expanded rapidly: the supply of workers has now risen for 44 consecutive months, driven by redundancies and by fewer openings to apply for.

Photograph: Stephen Richards, via Wikimedia Commons (CC BY-SA 2.0)

Official figures point the same way on volumes. The Office for National Statistics put total UK vacancies at 691,000 in the three months to September, down 5.1 per cent on a year earlier and the lowest level since early 2021 outside the pandemic. Jon Holt, KPMG’s group chief executive and UK senior partner, said employers had pulled back on hiring in the month before the Budget, and added: “Businesses will now be assessing whether the measures announced in the Budget give them enough stability to absorb the external pressures and higher costs they face. But with the Bank of England increasing interest rates and inflation set to continue rising over the coming months, there is a risk the green shoots we had been seeing in the jobs market could stall.”