The latest KPMG and REC, UK Report on Jobs: London indicated a mixed employment landscape at the start of the final quarter of 2026. Permanent placements were up for a fourth month running, with the pace of increase quickening on the month. However, temp billings fell solidly. Similarly, demand for permanent workers improved as vacancies rose for a seventh straight month, but temp vacancies were down at the fastest pace since March.
At the same time, redundancies remained key in underpinning sharper rises in the supply of both permanent and temporary workers. Lastly, pay pressures intensified to three-month highs and were broadly in line with their respective long-run averages. Moreover, London recorded the strongest rates of pay inflation among the four tracked English regions.
The KPMG and REC, UK Report on Jobs: London is compiled by S&P Global from responses to questionnaires sent to around 100 recruitment and employment consultancies in London.
Permanent placements rise modestly
A fourth straight monthly rise in new permanent joiners was recorded across the capital in October. While the pace of increase picked up from September, it remained notably weaker than the upturns seen in July and August. The need for more experienced workers was said to have driven the uptick.
Of the four tracked English regions, London was the only area where the respective seasonally adjusted index rose, with the capital seeing the strongest increase in permanent placements.
Meanwhile, temp billings were down for a second straight month in October. The pace of decrease was solid, albeit weaker than seen in the previous survey month. A lack of temp roles was cited as a key reason for the latest decrease.
Additionally, for the first time in seven months a decline in temp billings was seen at the UK level.
Demand for permanent staff improved for a seventh consecutive month in London during October. The pace of growth was unchanged from September and modest overall.
The North of England also registered a rise in permanent vacancies, with the pace of growth equal to that observed in London. Meanwhile, reductions were recorded elsewhere.
London-based recruiters recorded a second successive monthly reduction in temp vacancies in October. Moreover, the pace of reduction was sharp and the most pronounced since March.
Temp vacancies rose only fractionally across the UK as a whole, with growth centred in the North of England.
Sharp rise in permanent staff supply
October marked a rapid rise in permanent staff supply across London, thereby stretching the current run of increases to nearly four years. The latest uptick in candidate numbers was often attributed to company layoffs.
The pace at which permanent candidates rose across London rebounded notably from September’s recent low, but was the weakest among the four tracked English regions.
A sharp rise in temp staff supply was recorded across the capital during October. Recruiters often highlighted more people seeking temporary roles due to redundancies. That said, the pace of growth was little changed from September’s three-year low and the least pronounced of the four tracked English regions.
Starting salary inflation strongest in three months
Average starting salaries for permanent workers increased further in October. The rate of inflation was the fastest since July and broadly in line with the long-run average. Higher salaries were often linked to hiring for senior roles.
Of the four monitored English regions, London recorded the strongest rise in starting salaries.
Recruiters based in London recorded a seventh straight monthly rise in hourly pay rates in October. The rate of increase was solid and the fastest in three months. Anecdotal evidence highlighted that the filling of senior positions had pushed up average pay rates.
As with permanent salaries, London recorded the strongest rate of temp wage inflation among the four tracked English regions.
Commenting on the latest survey results, Anna Purchas, Vice Chair & London Office Senior Partner at KPMG UK, said:
“London’s jobs market continues to show resilience with permanent hiring growing for the fourth consecutive month even as the wider UK market slows. Permanent vacancies are also up, for the seventh month in a row, and while challenges remain, it’s encouraging to see businesses wanting to invest in our city’s talent.
“The recent Budget measures to support apprenticeships for younger workers are welcome steps towards sustaining this progress. By making it easier for young Londoners to develop their skills and start their careers, we can help create more jobs and support the capital’s long-term growth.”
Maxine Bligh, Interim Chief Executive at the Recruitment and Employment Confederation (REC), said:
“London is improving, but confidence remains fragile. The capital saw a fourth straight monthly rise in permanent placements and growth in permanent vacancies for a seventh consecutive month. This reflects the broader improvement in hiring across the UK in the second half of 2026. But a second straight monthly fall in temp billings and a further reduction in temporary vacancies in London highlight the fragility of employers’ confidence to invest in hiring. This shows there is still much more for government to do to give businesses the confidence they need to create jobs.
“This made the Budget a missed opportunity for both jobs and growth. With the OBR concluding that the Employment Rights Act is likely to have a negative impact on economic activity, the government missed the opportunity to reduce the risks of its guaranteed hours gamble by excluding recruitment agencies from the proposals. Businesses can absorb only so many additional employment costs before hiring slows and job creation suffers.”
Feature image by Dylan Bueltel from Pexels
