Recruitment of permanent staff stopped falling in July for the first time in nearly four years, according to the report on jobs from the Recruitment and Employment Confederation and KPMG, published on Monday.
The survey’s index of permanent staff placements reached 50 points, the level that separates growth from contraction. It had been below that mark every month since the autumn of 2022, the longest run of decline in the index’s history.
Maxine Bligh, the REC’s chief membership and innovation officer, said: “Rays of light are beginning to break through for the job market as employers revive hiring plans.
“Remarkably, this is the first month without a decline in permanent placements since Liz Truss resigned as prime minister in 2022, underlining just how prolonged the downturn in permanent hiring has been.”
Businesses in London took on new full-time staff at the quickest pace in nearly four years, the report showed. Permanent placements continued to decline in the north of England.
Callum Licence, group head of advisory at KPMG UK and Switzerland, said: “Over the past 45 months we have seen the longest recorded period of contraction in the permanent placements index, so to finally have it stable is a big milestone.”
The survey’s vacancies index rose to 47.1, its highest reading since September 2024, although it remains below the 50-point growth threshold. Vacancies for part-time roles increased at the fastest pace since August 2023, extending a trend picked up in June, when the same survey showed part-time hiring at a three-year high.
Pay growth for full-time staff reached a six-month high in July and has risen every month since March 2021, the survey found. That contrasts with official figures from the Office for National Statistics, which have shown private sector pay growth slowing to a six-year low. The latest ONS estimates showed unemployment stabilised at 4.9 per cent over the last quarter.
The REC-KPMG survey is closely watched as a gauge of labour market conditions because of concerns about the quality of official employment data.
The stabilisation follows a prolonged period of rising employment costs. Employer national insurance contributions were increased by £25 billion in Rachel Reeves’s 2024 budget, alongside rises in the minimum wage, while energy prices climbed after Russia’s invasion of Ukraine in 2022 and the war in the Middle East has pushed up oil prices. Over the same period, unemployment has risen to its highest level since the pandemic.
As recently as December, the same survey showed permanent and temporary hiring both falling, with permanent placements at a four-month low.
The figures will also be studied by the Bank of England, which has held interest rates at 3.75 per cent since December while inflation, at 2.6 per cent, remains above its 2 per cent target. Central banks monitor pay settlements closely because sustained increases can keep inflation above target.
