The latest KPMG & REC Report on Jobs series for October 2025 paints a picture of a UK labour market that is still subdued but showing early, if fragile, signs of stabilisation. Across the national report, and the regional editions for London and the South of England, a consistent theme emerges: conditions are not good, but they are also not as bad as feared, and a long-running downturn may be easing. However, continued economic uncertainty, weak demand, and cautious employer sentiment mean the road to recovery remains tentative.
1. National Picture: Temp Uptick, Permanent Contraction Softens
Across the UK, October saw the first increase in temporary billings in 16 months, a marginal but symbolically important shift.
At the same time, the decline in permanent placements, which has persisted since late 2022, slowed again. The Permanent Placements Index showed the softest contraction in 15 months
Recruiters across the national survey attributed weak permanent hiring to:
- Ongoing economic uncertainty,
- The upcoming government Budget, and
- Higher staffing costs, such as increased National Insurance contributions
Vacancies continued to decline for both permanent and temporary roles, although the pace of contraction eased slightly to a three-month low. Permanent vacancies fell faster than temporary roles, which is consistent with the preference for short-term hiring that recruiters cited in both the UK and regional reports
Candidate availability continued its sharp upward trajectory. October marked the 32nd consecutive month of rising labour supply, with redundancies, hiring freezes and fewer role openings driving the increase. The Total Staff Availability Index remained very high, one of the strongest readings since the pandemic period of late 2020
Pay pressures remained weak. Starting salaries grew only marginally, while temporary wages stagnated, ending a full year of pay growth. Recruiters reported clients levelling off or reducing salaries due to budget constraints and abundant candidate availability. The pay environment, at least in the short term, is decisively employer-leaning
2. London: Fragile Stabilisation but Still Behind the Curve
London’s labour market showed “tentative signs of stabilising”, according to the report’s commentary, but remains fragile and continues to lag the national trend. Permanent placements fell again, the seventh consecutive month of decline, but the rate moderated to the weakest fall among all English regions
Temporary billings in the capital also fell, continuing a run of 22 months of contraction. However, the drop was only slight and the softest since May, suggesting the capital may be starting to stabilise in line with the national shift, albeit from a weaker position. Unlike the UK overall, London did not experience an uptick in temporary billings in October
Demand for staff deteriorated notably. Both permanent and temporary vacancies posted marked declines, and at steeper rates than the national averages. This reinforces London’s position as one of the slowest-recovering regions in terms of employer appetite to hire
Where London does stand out is in staff availability. The capital was the only region to see a stronger rise in permanent candidate supply compared with September, driven primarily by redundancies. Temporary staff availability also rose markedly, continuing a long sequence of increases. This mirrors the national trend of growing labour supply but is particularly acute in the capital, where restructuring in major industries continues to release skilled professionals into the market
Pay behaviour in London remains muted. While permanent salaries rose, attributed in part to onboarding senior and specialist roles, the rate of increase was mild and the slowest for a year. Temporary pay increased solidly but also slowed from September and was deemed “historically subdued”.
3. South of England: Weakest Demand but Signs of Easing
The South of England report presents a labour market experiencing a significant easing of its downturn. Permanent placements fell at their slowest rate in two years, a marked improvement but still clearly below expansion territory. Continued employer hesitancy ahead of the Autumn Budget and general economic uncertainty remain a drag on decision-making, mirroring the national mood.
Temporary billings also declined but at the slowest pace in 21 months, again indicating a softening of the downturn. Unlike the UK as a whole, the South did not see an increase in temp billings, but the reduction was smaller than in previous months and much gentler than earlier in the year
The South, however, remains the weakest region in England for staff demand, with both permanent and temporary vacancies falling sharply and more quickly than in other regions. Recruiters reported that employers remain deeply conservative in their hiring plans, which is exacerbating the mismatch between rising candidate numbers and limited opportunities.
Candidate availability continues to rise rapidly. The South registered the strongest increase in permanent labour supply across all English regions and one of the fastest rises in temporary candidates as well. Redundancies and reduced contract opportunities remain the dominant drivers of this surge in available talent.
Pay trends are also subdued. Permanent starter salaries fell fractionally (in contrast to UK-wide marginal growth), and temporary wages declined at the quickest rate since July. Softening pay conditions reflect both weaker demand and high candidate availability, reinforcing the emerging opportunity for employers to secure high-quality talent at more competitive cost levels.
4. A Market Searching for Direction
Taken together, the latest KPMG & REC Report on Jobs point to a labour market stuck between recessionary behaviour and early-stage recovery:
Negative signals:
- Staff demand remains weak nationally, in London, and especially in the South.
- Permanent placements continue to fall everywhere.
- Pay pressures are weakening and, for temps, falling.
- Redundancies continue to swell candidate availability.
Positive signals:
- The rate of decline is easing, across placements, vacancies, and billings.
- Temporary hiring is beginning to lift nationally.
- Some sectors (e.g., accounting & finance, blue collar, engineering) are showing pockets of demand.
- Growing candidate availability is creating opportunities for employers willing to move early.
As Neil Carberry of the REC emphasised, this is not exuberance but rather “a more stable market” and one that policymakers must avoid destabilising again. The shadow of last year’s surprise payroll tax rise looms large across all commentary, reinforcing that businesses want clarity, stability and pro-investment measures in Budget 2025.
Conclusion
The October reports offer a mixed but cautiously hopeful picture. Conditions remain tough but are no longer deteriorating at the pace seen earlier in the year. In several areas, particularly temporary hiring and the slowing rate of permanent contraction, the data is mildly better than anticipated.
For employers and recruiters, the months ahead may prove critical: with candidate availability at multi-year highs and pay pressures easing, the market offers rare opportunities for forward-looking hiring. Whether this stabilisation evolves into recovery will depend heavily on economic conditions, business confidence, and the tone of the upcoming Budget.