Employers yearn for growth as jobs market stages ‘fragile recovery’

The UK jobs market is showing signs of "flickering back to life," according to a new report from KPMG and recruiter REC. Permanent and temporary job placements both inched up in the last month, with permanent hiring reaching a four-year high of 50.9, and temporary billings growing to the same figure at the slowest pace in five months.

Despite overall demand for workers falling in September, the rate of contraction was the weakest since August 2024. Permanent private-sector vacancies managed to increase for the first time in over two years. KPMG's Jon Holt noted it is "a fragile recovery," as growing uncertainty around energy prices and higher borrowing costs pose headwinds for the broader economy.

Businesses will be looking to the Budget later this month for greater certainty in tax policy and an environment conducive to growth. The pool of available workers in the UK deepened, with the staff availability index dropping to 57.2 from 60.6. Maxine Bligh, interim chief at REC, stated that the geopolitical backdrop remains challenging for government and business.

However, Chancellor John Healey must offer more than promises of stability, as employers want to hear about how to achieve growth. Healey's inaugural Budget on 28 October will be scrutinized, given economists' predictions that fiscal headroom may have halved due to the Iran war, necessitating either spending cuts or tax increases to meet fiscal rules.

Prime Minister Andy Burnham has pledged to tackle the "cost of business," despite concerns that the private sector could face additional taxation.