Weak economic outlook weighs heavily on recruitment - survey

Recruitment activity slowed as 2025 came to an end, a survey showed on Monday, weighed down by rising costs and ongoing economic uncertainty.

According to December’s UK report on jobs from KPMG and the Recruitment and Employment Confederation, the trade body, permanent staff appointments fell at the quickest rate since August.

Temporary billings also declined, albeit at the softest rate since June.

Demand for staff, meanwhile, was also weaker, with permanent vacancies falling more sharply than temporary positions.

Respondents flagged uncertainty around the economic outlook and rising costs, with starting salary inflation hitting a seven-month high. Temp wages also rose for the first time in three months.

Jon Holt, group chief executive and UK senior partner at KPMG, said: “The jobs market at the end of 2025 was still signalling caution.

“After a long stretch of rising cost pressures and higher global economic uncertainty, many firms continue to pause hiring and are flexing where they can by using temporary staff.

“As we head into the new year, this restraint is likely to remain in the near term.”

Neil Carberry, REC chief executive, said: “Making this a better year for hiring will require a focus on building business confidence to invest. With the Budget now behind us, the government needs to set out a clear path that firms can believe in, from the industrial strategy to pragmatic approaches to the Employment Rights Act.”

The UK report on jobs is compiled by S&P Global on behalf of KPMG and REC. It is based on responses to questionnaires sent to a panel of around 400 recruitment and employment consultancies between 4 and 17 December.