Britain's jobs market cooled in October, with hiring falling for the first time in four months, even as starting pay for new permanent staff rose at a faster pace. The monthly Report on Jobs from the Recruitment and Employment Confederation (REC) and KPMG, published on Monday 9 November, paints a split picture: fewer people placed into jobs, but stronger pay offers for those who were hired.

The survey, compiled by S&P Global from around 400 recruitment and employment consultancies, found that its gauge of permanent staff placements fell to 46.6 in October, down from 50.9 in September and the lowest reading since May. A reading below 50 signals a fall on the previous month. It was the second-quickest contraction of 2026 so far, after May.

Temporary hiring also weakened. The gauge for temporary billings fell to 48.9 from 50.9, its first decline since March, as firms held back from committing to new projects while completed contracts came to an end.

Pay rises even as hiring slows

Despite the pullback in hiring volumes, pay growth strengthened slightly during October. Recruitment consultancies reported faster increases in starting salaries for permanent staff, alongside rising average pay for temporary workers. Panellists said efforts to attract and secure high-calibre candidates, who remained in short supply, pushed pay offers up — although pay inflation for both types of staff stayed below the survey's long-run averages.

The survey was conducted between 12 and 26 October, before Chancellor John Healey's Budget on 28 October. Jon Holt, group chief executive and UK senior partner at KPMG, said October saw employers pull back on hiring in the month leading up to the Budget, ending a run of more positive news over recent months.

"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," Holt said. "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."

The Bank of England raised interest rates by a quarter-point to 4% last week, and its policymakers warned that at least one more increase was likely if the US-Iran conflict continues. The Budget itself did little to shift the outlook for growth or inflation, according to Reuters.

London and the north hold up; the south falls

The national picture hid sharp regional differences. London and the north of England both recorded growth in permanent placements, while the south of England saw the sharpest drop, with solid falls also seen in the Midlands. The north also registered a fractional rise in permanent appointments and continued marked growth in temporary billings.

Maxine Bligh, interim chief executive at the REC, pointed to the resilience in London and the north, and to demand for permanent staff in IT, engineering, construction and accounting and finance. She also criticised the Budget as a missed opportunity for jobs and growth, arguing the government should have excluded recruitment agencies from its guaranteed-hours proposals under the Employment Rights Act.

Among the ten monitored job categories, permanent vacancies increased in six, led by IT and computing and engineering, while retail and hotel and catering suffered the steepest declines. In the temporary market, blue-collar roles saw the largest increase in demand, while retail again saw the steepest fall.

More candidates chasing fewer jobs

Candidate availability expanded rapidly in October, rebounding from a three-year low. Worker supply has now risen for 44 consecutive months, driven by redundancies and fewer job openings, the report found. Permanent staff availability rose substantially across all four monitored English areas, led by the north of England.

Overall demand for workers fell slightly, but the reduction was the weakest in 26 months. Permanent vacancies fell at the slowest rate in over two years, while temporary vacancies rose fractionally at the start of the fourth quarter, halting a two-month period of contraction. Private-sector demand was broadly positive, while public-sector vacancies continued to decline for both permanent and short-term staff, though at slower rates than in September.

Official data reinforced the cooling trend. The Office for National Statistics reported total UK vacancies falling 5.1% year on year to 691,000 in the three months to September — the lowest level since early 2021 outside of the pandemic. Official earnings growth including bonuses slowed to 3.7% in the three months to August, the softest increase since late 2020.