UK Permanent Placements Fall Back to 46.6 as Hiring Recovery Stalls

UK permanent placements returned to contraction in October 2026, with the Permanent Placements Index falling to 46.6 from 50.9 in September — the second-sharpest decline recorded so far this year, according to the KPMG & REC UK Report on Jobs published 9 November. The reading ends a two-month run of growth and signals that employers are again delaying or scaling back hiring decisions.

Temporary billings fell in tandem, with the index dropping to 48.9 from 50.9, ending six consecutive months of growth dating back to April. Recruiters cited rising operating and borrowing costs plus economic uncertainty as the main drivers.

What do the headline numbers show?

The November snapshot, compiled from four reports covering October survey data, points to a market moving in two directions at once:

• 46.6 – Permanent Placements Index, down from 50.9
• 48.9 – Temporary Billings Index, first decline since March
• 48.7 – Total Vacancies Index, still contracting but at the slowest pace in 26 months
• 52.8 – UK Services PMI, an eight-month high
• 43.6 – UK Construction PMI, the steepest contraction since June

Readings above 50 indicate growth; below 50 signals contraction.

Which regions and sectors still grew?

The regional split was sharp. London posted marginal permanent growth at 51.1, the North of England a fractional rise at 50.1, but the Midlands fell to 45.0 and the South of England recorded the sharpest decline at 42.6.

Temporary recruitment showed the same divide. The North of England grew strongly at 54.8, while London (46.9), the Midlands (47.7) and the South (45.4) all declined.

Sector demand remained uneven. Six of ten monitored permanent sectors recorded rising vacancies, led by IT & Computing and Engineering. Retail and Hotel & Catering saw the steepest falls. On the temporary side, only four sectors grew — Blue Collar (strongest), IT & Computing, Nursing/Medical & Care and Engineering.

Is demand actually disappearing?

Not uniformly. The Total Vacancies Index edged up from 48.5 to 48.7 — still below the neutral 50.0 mark, but the slowest reduction in more than two years. Permanent vacancies declined at their weakest rate since August 2024, and temporary vacancies rose fractionally after two months of contraction.

Private-sector permanent vacancies continued to increase, though more slowly than in September; public-sector demand fell across both permanent and temporary roles. The sector breakdowns are not seasonally adjusted.

Candidate availability, meanwhile, rose for the 44th consecutive month, with the Total Staff Availability Index climbing to 59.4 from 57.2. Recruiters linked the rise to redundancies and fewer job opportunities. Starting pay increased slightly faster for both staff types as employers competed for high-calibre candidates, though pay inflation stayed below historical averages. Shortages persisted in engineering, technology, finance and skilled trades.

What happened in services and construction?

The S&P Global UK Services PMI rose to 52.8 from 52.1, its strongest expansion since February and a fourth straight month of growth. Services employment rose for the first time in just over two years, with the Employment Index reaching 50.4. Some employers cited AI adoption and cost pressures as reasons for continued hiring freezes. Input price inflation hit a five-month high on fuel, transport, energy and wage costs.

Construction told the opposite story. The S&P Global UK Construction PMI fell to 43.6 from 46.1 — a 22nd consecutive month of declining activity. The Housing Activity Index plunged to 35.1 from 40.7, the fastest fall in housebuilding this year. Civil engineering improved from 42.2 to 45.9 but remained in contraction, with infrastructure niches such as data centres and energy networks offering limited offsets.

Globally, the J.P. Morgan Global Manufacturing PMI registered 52.6, down from 53.0 but above 50 for a fifteenth consecutive month, with worldwide manufacturing employment rising for a fourth month.

What should agencies do now?

Ashley Lyas, Director at QUBA Solutions, said: "I don't think agencies should overlook the more encouraging signals beneath the headline numbers. Vacancy declines are easing, services businesses are growing, and some employers are starting to recruit again."

She added that confidence "remains fragile" and that offering permanent, temporary or contract recruitment "gives you more ways to support businesses as their needs change." Agencies adding temp desks face added payroll, credit control and cash-flow demands — workers must be paid before client invoices settle — making invoice finance and back-office support a practical consideration.

With vacancy declines easing and services hiring back in growth, the next round of PMI and Report on Jobs data will show whether October's setback was a pause in employer confidence or the start of a longer hiring freeze.