The UK labour market closed out 2025 with another month of falling staff appointments, according to the latest KPMG and REC Report on Jobs, signalling continued caution among employers amid economic uncertainty and cost pressures.
Permanent placements fell sharply in December, extending the downturn to 39 consecutive months. The rate of contraction was the steepest since August, though slightly slower than the average decline seen throughout 2025.
Recruiters attributed the drop to weak business confidence, with many firms pausing hiring plans and reducing job opportunities.
The decline was broad-based across England, with marked falls in London, the north and the south. The Midlands bucked the trend, recording a slight rise in permanent appointments – the first increase since May.
Temporary hiring also weakened, with temp billings falling for the second month running. Although the pace of decline quickened compared with November, it remained mild and below the year’s average. Again, the Midlands stood out, posting a sharp increase in temp billings, contrasting with steep falls elsewhere.
Jon Holt, group chief executive and UK senior partner at KPMG, acknowledged that the job market was still signalling caution. He said: “After a long stretch of rising cost pressures and global uncertainty, many firms continue to pause hiring and flex where they can by using temporary staff. As we head into the New Year, this restraint is likely to remain in the near term.”
“Chief execs who have been prioritising increased investment in tech to improve resilience and productivity, will be looking for signs of greater confidence in the wider economy before turning the hiring taps back on.”
Neil Carberry, chief executive of the REC, added: “It’s always difficult to draw conclusions from December data, but the fact that the market slipped back a little on November is a reminder of the pressure employers are under. Nevertheless, with placements falling at a slower pace than the 2025 average, there is hope this is a seasonal dip rather than a reversal of recent improvements.”
Carberry urged policymakers to focus on building business confidence: “Making this a better year for hiring will require a clear path firms can believe in – from industrial strategy to pragmatic approaches on employment rights.”
