After two consecutive months of growth, permanent placements slipped back into decline. Temporary billings also fell for the first time since March, while candidate availability continued to climb. Not exactly the recovery recruiters were hoping for.
But dig a little deeper into the latest KPMG and REC Report on Jobs and there's a more interesting story emerging. One of hesitation rather than wholesale retreat, with some encouraging signs buried beneath the disappointing headlines.
Permanent placements: Back into the red
Two months of growth. That's all we got.
Permanent placements fell sharply in October, recording the second-fastest decline of the year. Employers remained reluctant to make hiring decisions, with uncertainty ahead of the Budget adding to existing concerns about geopolitical instability, energy prices and borrowing costs.
The South experienced the steepest decline, followed by the Midlands. London and the North, however, managed to maintain marginal growth.
A reminder that the UK recruitment market isn't moving in one direction.
Temporary billings: The first wobble in seven months
Temporary billings also slipped, albeit modestly, ending a seven-month period without decline.
Completed assignments and a shortage of new work were the main contributors. Businesses still need people, but they're understandably cautious about making fresh commitments.
Every region recorded a decline apart from the North, which continued to grow.
For a market that has increasingly relied on temporary and contract recruitment for stability, it's a development worth watching.
Vacancies: A little light through the clouds
Here's where things become more interesting.
Permanent vacancies continued to fall, but at their slowest rate since August 2024. Temporary vacancies actually edged upwards following two months of decline.
Meanwhile, official ONS figures put total vacancies at 691,000, down 5.1% year on year and their lowest level since April 2021. Excluding the pandemic, we'd have to go back to 2014 to find a lower figure.
Hardly cause for celebration, but the pace of decline is easing.
And after several difficult years, that's worth recognising.
Candidates: Plenty of choice, but where are the jobs?
Candidate availability increased again in October, extending an extraordinary run of 44 consecutive months of rising supply.
Redundancies and fewer job opportunities continue to push more people into the market.
For employers, that means greater choice. For recruiters, it creates another challenge.
When candidates are plentiful, simply supplying CVs becomes an increasingly difficult proposition to differentiate.
The agencies demonstrating genuine market knowledge, assessment expertise and an ability to identify the right people will have a much stronger story to tell.
Pay: Good people still command good money
Despite the growing pool of available candidates, starting salaries for permanent roles accelerated again.
London recorded a particularly sharp increase, while the South saw relatively little movement.
Temporary pay growth also quickened slightly, with London leading the way and the Midlands showing the weakest increases.
It's an interesting contradiction. More candidates, fewer vacancies, yet employers are still having to pay more to secure the talent they want.
Availability and suitability are two very different things.
Sectors: Not everyone is struggling
Six of the ten sectors monitored recorded growth in permanent vacancies, with IT & Computing and Engineering leading the way.
Retail and Hotel & Catering experienced the sharpest declines.
On the temporary side, Blue Collar vacancies performed best, while Retail once again suffered the biggest fall.
For agencies operating across multiple sectors, these differences matter. The opportunities haven't disappeared, but they're certainly not distributed evenly.
So, where does this leave us?
Both KPMG and REC have highlighted the damaging effect of uncertainty on business confidence.
October's figures reflect a market already struggling with uncertainty ahead of the Budget. Whether the measures announced subsequently will help restore business confidence remains to be seen, particularly with employers also weighing up the implications of the Employment Rights Act.
And confidence, as we've seen repeatedly, can disappear remarkably quickly.
But I'm reluctant to interpret October's figures as evidence that the recruitment market is heading back into the prolonged decline we've experienced over recent years.
Vacancies are falling at their slowest pace in more than two years. Salaries are still increasing. Certain sectors are growing, and London and the North are demonstrating resilience in permanent hiring.
These aren't necessarily the characteristics of a market in complete retreat. Equally, they're not yet evidence of a sustained recovery.
What we're seeing is a market that remains cautious, with some encouraging signs that conditions may be stabilising.
And there's an opportunity here for recruitment businesses prepared to adapt.
Employers who are reluctant to commit to permanent headcount still have projects to deliver, skills gaps to fill and workloads to manage. Temporary, contract and flexible workforce solutions can provide an attractive alternative.
Of course, the latest figures remind us that these markets aren't immune to uncertainty either.
But the underlying demand for work to be done hasn't vanished.
Perhaps the biggest question isn't when the recruitment market will recover, but how well positioned your business is to benefit when it does.
Because waiting for confidence to return isn't much of a strategy.
Paul Sharpe is a business mentor and NED to recruitment agencies, helping them grow, scale and build talent solutions
