Marvin OnumonuKPMG and REC’s latest UK jobs report found that candidate numbers rose at the fastest rate since late 2020 in August, while hiring slowed across the country.
Permanent and temporary staff availability increased sharply, mostly due to redundancies and fewer job opportunities.
Recruitment activity fell again, but the drop was softer than in previous months.
Starting salaries for new permanent staff saw only a slight increase, marking the weakest rise in four-and-a-half years.
Temp pay also grew more slowly than usual.
Recruiters linked this to more people looking for work, less demand for staff, and tighter budgets from employers.
Permanent placements fell across all regions, with the sharpest drop in the South.
Temp billings fell fastest in the South as well, although the Midlands saw a slight increase.
Demand for permanent staff dropped in most sectors, with only construction seeing a marginal rise.
Retail had the biggest fall in permanent vacancies, followed by hotel and catering.
Retail also led the decline in short-term vacancies, while construction and blue collar roles saw the smallest falls.
Jon Holt, group CEO and UK senior partner at KPMG, said: “The business trading environment remains complex and it is still a mixed picture when it comes to reported business confidence.
“This complexity, coupled with a subdued economic outlook, means chief execs continue to pause their future spending plans, including hiring.
“Given the speculation around upcoming Budget measures, it’s unlikely we’ll see a significant shift in recruitment patterns in the near term as businesses evaluate their investment strategies in response to policy commitments and the rapid pace of change brought by AI and new technologies.”
Neil Carberry, CEO at REC, said: “Employers need a shot of confidence along with their seasonal flu jabs this autumn.
“August saw recent declines in the market moderating, and a few positive signs – like an improving market for temps in the Midlands.
“Overall, permanent placements are declining at their slowest rate since May, and the reduction in temporary billings also eased.”
Carberry added: “There is certainly potential out there – but with fewer vacancies and more candidates looking for work, the overall picture is still subdued.
“While we have seen a summer slowdown, we will hopefully see more positive signs when the September data come through next month.
“All eyes are now on the Autumn Budget, in hope now that the Chancellor won’t do any further damage to the labour market with costs on hiring.”
He added: “For the economy to thrive, the Budget must recognise the need for investment in people.
“Long-term investment in skills, workforce stability, a more practical approach to the Employment Right Bill and meaningful partnerships with employers will yield far more enduring returns than short-term fixes.”
