Ryan FowlerRecruitment activity across the UK continued to decline sharply at the start of the third quarter, according to the latest KPMG and REC UK Report on Jobs survey, compiled by S&P Global.
Both permanent placements and temp billings fell, with respondents linking the drop to weak employer confidence, economic uncertainty and tighter recruitment budgets.
The survey also recorded the steepest fall in overall vacancies since April, while staff availability rose at one of the fastest rates since the series began in 1997, often attributed to redundancies and concerns over job security.
An increased talent pool and budget constraints contributed to slower pay growth, with starting salaries rising at their weakest rate since March 2021.
Temp pay growth also eased to a five-month low.
Jon Holt, group chief executive and UK senior partner at KPMG, said: “The labour market cooled in July as chief execs held back from increasing their recruitment budgets.
“Economic uncertainty, the complexities of AI adoption and global headwinds are all weighing on business planning.
“A larger talent pool has helped temper wage inflation, which helped convince the Bank of England to cut interest rates.
“While UK plc remains resilient, a further loosening of monetary policy could help boost business confidence.
“But many firms will continue to pause major investment decisions until there is greater clarity in the Autumn.”
Kate Shoesmith, REC deputy chief executive, said: “With starting salaries and temp pay rising only modestly, it was right to cut interest rates last week.
“More action like this, to stabilise the business cost-base, is what will support growth and boost the jobs market this year.
“Construction, a key economic bellwether, has seen a rise in temp vacancies, an early sign of confidence returning.
“Demand for blue-collar temp roles and permanent engineering jobs also remains steady, offering another glimmer of optimism. At the same time, hiring in retail and hospitality are down.
“Employers in these sectors are pausing due to cost pressures and uncertainty around employment law, although when the turn comes, these industries typically rebound quickly.”
Hannah Goldstraw, senior consultant at Barrow Mount Recruitment, said: “These findings reflect what we’re experiencing with clients – more candidates coming to market, often due to restructuring, but fewer roles to place them into.
“Businesses are being selective and budgets remain tight, which means even highly skilled candidates can face longer job searches.
“That said, we’re starting to see some movement in sectors like construction and engineering, which could signal where hiring confidence might return first.”
