UK employers pulled back on hiring in October, with permanent staff placements falling for the first time in four months, according to the latest KPMG and REC Report on Jobs, published on 9 November 2026.

The monthly survey, compiled by S&P Global from around 400 recruitment and employment consultancies, found that the permanent placements index fell to 46.6 in October, down from 50.9 in September. Any reading below 50 signals a decline. It was the lowest reading since May and the second-quickest contraction recorded so far in 2026.

Temporary billings also fell, to 48.9, marking the first decline since March. Recruiters said employers delayed or scaled back hiring decisions because of economic uncertainty and rising costs, with many waiting to see the effects of the Budget on 28 October.

Vacancies fall at slowest pace in two years

Despite the drop in placements, the survey contained some brighter signals. 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. Temporary vacancies rose marginally, halting a two-month run of declines.

Demand for permanent staff rose in six of the ten categories monitored, led by IT and computing and by engineering. Construction and accounting and finance also grew. Retail and hotel and catering recorded the steepest falls.

Private sector demand was broadly positive, with permanent and temporary roles both increasing, although only modestly. Public sector vacancies continued to decline for both permanent and short-term staff, though at slower rates than in September.

More candidates chasing fewer roles

Candidate availability increased sharply in October, rebounding from a three-year low. Recruiters said redundancies and fewer job openings were behind the rise. The supply of workers has now risen for 44 consecutive months.

Permanent staff availability rose substantially across all four monitored English regions, led by the north of England, while London saw the slowest increase. Temporary candidate supply also rose steeply, particularly in the Midlands and the south of England.

Regionally, the picture was mixed. The south of England recorded the sharpest drop in permanent placements and temporary billings, with solid falls also seen in the Midlands. The north of England registered a fractional rise in permanent appointments and continued marked growth in temporary billings. London saw marginal growth in permanent placements.

Pay rises even as hiring cools

Starting salaries for permanent staff rose at a faster pace in October, and average pay for temporary workers also increased more quickly, as employers competed for high-calibre candidates who remain in short supply. Even so, pay growth on both measures stayed below the survey's long-run averages.

Official figures from the Office for National Statistics reinforced the cooling trend, showing 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 the pandemic. Regular pay growth including bonuses slowed to 3.7% in the three months to August.

Jon Holt, group chief executive and UK senior partner at KPMG, said: "There is a risk the green shoots we had been seeing in the jobs market could stall." He added that businesses would now be assessing whether the measures announced in the Budget give them enough stability to absorb higher costs.

Maxine Bligh, interim chief executive of the REC, pointed to "signs of the recent resilience in London and the north of England", noting that both recorded growth in permanent placements and that demand rose for permanent staff in sectors including IT, engineering, construction and accounting and finance.

The survey was carried out between 12 and 26 October, before the Budget and before the Bank of England raised Bank Rate to 4%. The next official labour market figures from the ONS are due on 17 November.