Permanent hiring stabilises after 45-month decline, report finds

Growth in London reached a near four-year high, while permanent hiring continued to decline across the South and North of England.

The North of England recorded the strongest increase in temporary billings, followed by London, while the Midlands saw a slight decline.

Across employment sectors, permanent vacancies increased in three of the 10 categories monitored, led by Nursing/Medical/Care. Retail and Hotel & Catering recorded the steepest declines.

Temporary vacancies increased across seven categories, with Blue Collar and Engineering recording the strongest growth.

Callum Licence, group head of advisory at KPMG UK and Switzerland, said: “Despite ongoing uncertainty it’s encouraging that businesses are starting to press ahead with investment, which means across the board we are starting to see the data moving in the right direction.

“This is most pronounced in the continued rise of temporary work, where employers have been looking at flexible approaches and hiring has been growing for several months, and permanent hiring is starting to turn a corner.

“Over the past 45 months we have seen the longest recorded period of contraction in the permanent placements index, so to finally have it stable is a big milestone.

“With a new Government in place, businesses will be looking for signs that the new policies can translate into greater confidence to invest and hire.”

Maxine Bligh, chief membership and innovation officer at REC, said: “Rays of light are beginning to break through for the job market as employers revive hiring plans.

“Temporary vacancies are up for the first time in two years, while recruiters’ revenue from supplying temporary workers has risen for a fourth consecutive month.

“And the permanent market is stabilising. Remarkably, this is the first month without a decline in permanent placements since Liz Truss resigned as Prime Minister in 2022, underlining just how prolonged the downturn in permanent hiring has been.

“That makes it all the more important that the government takes decisions now that builds business confidence and momentum in hiring.

“This means action to bring the Industrial Strategy to life and exercising pragmatism around the implementation of the Employment Rights Act, particularly guaranteed hours proposals. The Autumn Budget is a great opportunity to give businesses the shot of confidence they need to hire and invest.

“If the government is serious about getting more young people their first vital opportunities of work they must think carefully about the balance of their Make Work Pay Agenda by easing mounting costs and red tape around employment.”

George Holmes, managing director of business finance specialists Aurora Capital, said: “There are some genuinely encouraging signs in these figures, but I don’t think we’re seeing businesses suddenly throw caution to the wind.

“The rise in temporary hiring suggests firms are starting to need more capacity, but they are still hesitant about making longer-term commitments. For businesses that have spent months managing unpredictable costs and demand, bringing in temporary staff can be a way to grow without taking on quite as much risk.

“That matters because recruitment is often one of the clearest indicators of how confident a business feels about its future. When firms are uncertain, permanent hiring is one of the easiest decisions to postpone.

“If demand continues to improve and costs become more predictable, we could see that temporary recruitment gradually translate into more permanent roles.

“For now, though, these figures suggest businesses are beginning to test the water again. That’s a positive step, but we’re not at the point where I’d call it a full return of confidence.”