Recruitment consultancies across the UK signalled only a mild reduction in hiring activity at the end of the first quarter.
Notably, the latest KPMG and REC, UK Report on Jobs survey showed that permanent staff appointments declined only marginally for the second month in a row, while temp billings decreased modestly.
The downturn in demand for staff also eased, with overall vacancies falling at the softest pace since last May.
Higher demand for permanent workers was recorded across both the
engineering and construction categories in March. Falls were meanwhile
seen across the remaining eight job sectors monitored by the survey, led
by Hotel & Catering and Retail.
Nevertheless, relatively muted demand for staff and sharply rising candidate numbers were linked to slower increases in starting pay. Notably, both starting salaries and temp wages rose only slightly during March.
The report is compiled by S&P Global from responses to questionnaires sent to a panel of around 400 UK recruitment and employment consultancies.
The number of people placed into permanent roles across the UK fell again in March, but the rate of contraction was unchanged from February and only marginal. While market uncertainty - which was exacerbated by the war in the Middle East - and rising costs were both linked to the fall, recruiters also noted that some employers had pressed ahead with previously delayed hiring plans. At the same time, temp billings fell at a modest pace that was slower than in February.
Although overall demand for workers continued to weaken at the end of the opening quarter of the year, the rate of reduction eased for the third straight month. Whilst solid, the latest decline in vacancies was the second-slowest seen in nearly a year-and-a-half (behind May 2025). Underlying data indicated that demand for both permanent and temporary labour fell at slightly slower rates.
The rate of starting salary inflation continued to ease from January's recent peak in March. Furthermore, the rate of growth was the weakest recorded in five months and only marginal. There were reports that higher candidate numbers and tighter employer budgets had dampened salary growth. Temp wage inflation was likewise marginal in March, having eased to a four-month low.
UK recruitment consultancies signalled sharper increases in the availability of both permanent and temporary workers in March. Overall, the supply of labour expanded at the quickest rate in 2026 to date. There were frequent reports that redundancies and job scarcity had pushed up candidate numbers. Growth in permanent staff availability continued to outpace that seen for temporary job seekers.
Jon Holt, Group Chief Executive and UK Senior Partner KPMG, said: “Despite the increased global uncertainty there have been signs this year that the long-term decline in hiring may be starting to stabilise as businesses press ahead with their previously delayed recruitment plans. However, until the wider economic impacts of the conflict in the Middle East start to become clearer, many employers will remain cautious about committing to new roles. If that uncertainty remains, the risk is that hiring decisions and investment are deferred again, delaying any sustained recovery in the jobs market.”
Neil Carberry, REC Chief Executive, said: “The Gulf Conflict provided a headwind to hiring in March, but this did not stop the trend of stabilisation that has defined 2026 so far. The effects of a longer-run crisis are unclear, but the resilience of the jobs market last month was heartening. Permanent placements showed their weakest contraction in three years. Modest growth in London, which usually runs ahead of the national trend, is particularly heartening. Likewise, temporary recruitment fell more slowly than in February, with a sustained upturn in the Midlands a clear trend through the winter.
“Business prospects for 2026 remain finely balanced, and confidence will be key. Households and businesses are still sitting on cash that might be put to work in the economy if the climate is right, boosting growth and particularly helping struggling consumer-facing sectors like retail and hospitality. The key way government can help is to tackle the root cause of the cost of living squeeze – the rising cost of doing business. Greater pragmatism on key policies, including the unworkable approach that has been taken on guaranteed hours, is needed now.”
