Recruitment Industry Trends
Following the publication of the KPMG and REC, UK Report on Jobs for March 2026, Paul Sharpe, Founder of NorthStar People, shares a summary of the key findings and what they mean for the recruitment industry as edge closer to the market changes.
Key Findings for March 2026 UK Labour Market
Hiring activity deteriorates only slightly in March
Marginal fall in permanent placements and slower drop in temp billings.
Demand for staff falls at softest pace in ten months... but rates of pay growth ease amid steeper upturn in staff availability.
Staff appointments
- Permanent placements continue to fall only marginally: The seasonally adjusted Permanent Placements Index posted below the neutral 50.0 level to signal a further reduction in permanent staff appointments across the UK in March.
- Modest reduction in temp billings:Recruitment consultancies in the UK signalled a reduction in temp billings for the fourth time in the past five months in March.
Vacancies
March sees softer decline in overall vacancies
- Permanent vacancies: Demand for permanent staff fell for the thirty-first month in a row and solidly overall. That said, it marked the weakest reduction in permanent vacancies since last May.
- Temporary vacancies: Temporary staff demand meanwhile fell at a fractionally slower but still sharp rate.
- Public & private sector vacancies: According to underlying data, the reduction in overall vacancies was broad-based across both private and public sectors.
A deeper insight can be seen inside KPMG and REC, UK Report on Jobs section 6 - Demand for skills.
Staff availibility
- Availability of labour increases at quickest rate in three months: Latest survey data pointed to a sharp and accelerated rise in the overall availability of staff in March.
- Steeper rise in permanent candidate supply: Recruitment consultancies across the UK signalled a further increase in the supply of permanent workers in March, thereby stretching the current period of growth to 37 months.
- Temp candidate numbers expand at fastest pace in 2026 to date: The seasonally adjusted Temporary Staff availability Index posted above the neutral 50.0 level to signal a sustained rise in the number of people seeking short-term roles in March. Although slower than the average seen over 2025.
Special feature
- Official data show pay growth slipping to five-year low: Recent earnings data published by the Office for National Statistics (ONS) showed that pay growth continued to ease across the UK into 2026. Notably, average earnings (excluding bonuses) increased by 3.8% on an annual basis in the three months to January, marking the slowest rates of expansion since the three months to November 2020. Including bonuses, pay increased by 3.9%, which was also the softest rate of growth in over five years
A deeper insight can be seen inside KPMG and REC.
Paul Sharpe's perspective
Permanent placements
- Still falling but only just. The rate of contraction is the weakest in three years, and London is showing modest growth, which typically leads the national trend. A cautious green shoot.
Temporary billings
- Fell again, but more slowly than February. The Midlands is the standout (again!), the only English region recording temp billings growth, and the strongest seen in 2026 so far.
Demand for staff
- Vacancies have been falling for over two and a half years, but the pace is easing for the third month running. The slowest decline in ten months. Not recovery, but stabilisation.
Pay pressures
- The post-pandemic pay boom is over. Starting salary growth is at a five-month low, temp wages at a four-month low. Real pay after inflation grew just 0.4% in the three months to January, the weakest in over two years.
Candidate Availability:
- Rising sharply and accelerating. Redundancies and restructuring are the main drivers. More candidates, fewer roles, it is firmly a buyer's market for employers.
Sector
- Engineering and construction are the only sectors seeing genuine growth in permanent demand. Retail and hospitality are falling fastest on both permanent and temp. Blue collar is the only sector bucking the trend in temporary work.
Skills in short supply
- Accountants
- Software Developers
- AI/ML Engineers
- Electrical Engineers
- Quantity Surveyors
- Nurses
- Range of Blue Collar trades including Drivers and Electricians.
Regional performance summary:
- Scotland: The standout this month. Permanent placements growing at the fastest pace since mid-2022. Worth watching.
- London: Modest permanent placement growth, a positive leading indicator given London typically runs ahead of the national trend.
- Midlands: The temp market bright spot. Sustained growth through the winter.
- North of England: Holding up well on permanent, above the national index.
- South of England: The weakest region for permanent hiring this month.
The bigger picture — AI
Indeed's data adds important context. Overall, UK job postings sit 27% below pre-pandemic levels. AI related postings are 127% above it. Nearly 1 in 13 UK job postings now mentions AI and this isn't just a tech story. Marketing, HR, finance and accounting are all seeing AI references surge even as overall hiring in those sectors falls. For your clients, AI literacy is becoming a baseline expectation across knowledge work roles, not just technical ones.
Paul's view
The Gulf Conflict is a real headwind and the Bank of England rate relief everyone was counting on looks increasingly uncertain. At the coal face it still feels tough, but the data does suggest the worst of the decline is easing. The agencies performing well right now are those with genuine sector expertise, strong existing client relationships and selling solutions that generate recurring revenue.
Follow the link to benchmark your recruitment agency across the 13 key business metrics and get a FREE report.
