The latest KPMG and REC, UK Report on Jobs revealed a further downturn in hiring activity across London during February. Notably, both permanent placements and temporary billings declined sharply, although the rates of reduction showed some moderation.
Conservative hiring practices were largely attributed to ongoing economic uncertainty and recent changes to labour policies following the Budget, which have influenced hiring strategies. In response to these challenging economic conditions, the number of vacancies throughout the capital further diminished. When excluding the pandemic months, the latest declines in demand for both permanent and temporary staff were the most substantial since the Global Financial Crisis. The drop in vacancies, coupled with an increase in redundancies, led to a surge in staff availability. Temporary staff availability rose at a particularly rapid pace.

Finally, regarding pay pressures, February witnessed an intensification as companies aimed to attract skilled workers. However, the rates of increase were historically low.

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.

Commenting on the latest survey results, Anna Purchas, London Office Senior Partner at KPMG UK, said: “Hiring activity in London remained subdued in February, as a challenging macro-economic picture and pay pressures led to notable slowdowns in both permanent staff hiring and temporary billings. The capital saw the steepest fall in short-term billings of all UK regions, but it was encouraging to see the decline in permanent placements ease to the slowest for four months, suggesting the market may be bottoming out as firms begin to look ahead to the new tax year.”

Permanent placements decline sharply, albeit at moderated pace

The number of people placed into permanent roles in London fell for a seventh straight month in February. The downturn was attributed to an array of reasons including the forthcoming increase in National Insurance Contributions and minimum wage hikes, economic uncertainties stemming from the October Budget and geopolitical instability.

That said, the rate at which permanent placements fell was the weakest since October 2024. In fact, all four monitored English regions noted softer rates of contraction.

Adjusted for seasonal variation, the Temporary Billings Index noted a fourteenth straight monthly reduction in temp billings across London in February. The rate of decrease moderated from that seen in January but was rapid overall. According to anecdotal evidence, the decrease was attributed to clients cutting costs, alongside contract pauses and completions. Economic uncertainty was also cited.
A widespread fall in temp billings was seen across the four monitored English regions, the first such occurrence in nearly a year. London posted the strongest decrease.

Demand for workers deteriorated rapidly across the capital in February. The seventh successive monthly decline in permanent vacancies was the strongest since October 2020, although less severe than the national average.

Additionally, temp vacancies in London have fallen on a monthly basis since September 2024. The rate of reduction was the most pronounced since mid-2020 and the strongest among the four English regions monitored.