Recruitment Industry Trends
Following the publication of the KPMG and REC, UK Report on Jobs for October 2025, Paul Sharpe, Founder of NorthStar People, shares a summary of key findings and what they mean for the recruitment industry.
Key Findings for September 2025 UK Labour Market
Permanent Placements
The decline in permanent staff appointments across the UK continued into September, but the rate of reduction was the softest seen for a year. Recruiters attributed the ongoing contraction to continued employer caution amid weak economic conditions and cost concerns.
Temporary Billings
Temporary billings fell for the fifteenth consecutive month, with the rate of reduction quickening slightly compared to August. The Midlands and North of England saw modest increases, while London and the South of England recorded sharper declines.
Demand for Staff (Vacancies)
Total vacancies continued to fall sharply, with the Vacancy Index at 43.0, marking almost two years below the growth threshold. Demand for permanent workers declined at a steeper rate than for temporary staff, and the public sector saw the most pronounced fall in permanent roles.
By contrast, the Engineering sector recorded a small but encouraging rise in both permanent and temporary demand - one of the few sectors to buck the overall trend.
Pay Growth
Starting salaries for new permanent joiners rose only fractionally, registering an index reading of 50.2, the weakest rate of growth since early 2021. Temporary wage inflation also eased, posting 50.8, indicating near-stagnant pay growth overall.
Recruiters cited budget pressures, weaker hiring demand, and an expanding candidate pool as key factors behind the slowdown in wage inflation.
Candidate Supply
The availability of candidates continued to rise sharply in September, extending the current expansion to 31 consecutive months. Although the rate of growth softened slightly from August’s post-pandemic record, both permanent and temporary availability remained elevated. This trend reflects a mix of ongoing redundancies and reduced recruitment activity across many sectors.
Regional Trends
- South of England and North of England: Permanent placements fell at slower rates, showing tentative signs of stabilisation.
- London and Midlands: Declines were steeper, particularly for permanent hires.
- Midlands and North: Temporary billings showed growth, suggesting regional resilience in flexible hiring.
Sectoral Demand
Nine out of ten monitored job categories recorded lower demand for permanent staff.
The steepest contractions were seen in Retail and Hotel & Catering, while Engineering showed slight growth for both permanent and temporary roles.
Pay Pressures
With the Permanent Salaries Index at 50.2 and the Temporary Wages Index at 50.8, September marked the weakest rate of pay growth in over four years.
This stagnation highlights the ongoing tension between employers managing tighter budgets and an expanding candidate supply that eases wage competition.
Skills in Short Supply (Permanent)
- Engineers
- Accountants
- HR Professionals
- AI/ML Developers
- Project Managers
- Solicitors
- Software Developers
Skills in Short Supply (Temporary)
- Assembly Technicians
- CNC Machinists
- Carers
- IT Support
- Forklift Drivers
- Welders
- Nurses
According to Indeed
Recent data from the Indeed Hiring Lab reinforces the slowdown across the UK labour market.
- Pay Transparency: 56.3% of job postings include pay details - down 8.5pp year-over-year.
- Job Postings: Down 11% year-over-year, showing continued cooling in hiring appetite.
- Wages: Advertised salaries are up just 5.6% annually - the slowest pace in over a year.
Despite the cooling data, redundancy notifications remain relatively low, indicating that while growth is sluggish, the market isn’t collapsing - it’s rebalancing.
What are NorthStar People Seeing?
We’re advising agencies not to repeat 2025’s playbook in 2026. The average agency now makes only 18p in the pound before dividends and taxes - a margin that will likely shrink further without change.
While the market feels tough, opportunities still exist. Recruiters who embrace digital tools, data-driven decision-making, and client advisory roles will be best placed to grow despite the headwinds.
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