UK Hiring Slowdown Deepens As Firms Curb Recruitment Spending

UK hiring activity contracted again in July, with concerns over the economy and higher labour costs weighing on recruitment, according to the latest KPMG and REC jobs report.

Permanent staff appointments recorded a reading of 40.0, up slightly from June’s 39.1 but still well below the 50 mark that signals growth. Recruiters said weaker business confidence and rising payroll costs were key reasons for reduced hiring.

Some sectors, such as engineering, saw steady demand, but retail and hospitality continued to report declines. Starting salaries rose at their slowest pace since March 2021, marking the second consecutive month of weaker pay growth.

KPMG chief executive Jon Holt said economic uncertainty, challenges around AI adoption and global headwinds were prompting firms to hold back on recruitment.

REC deputy chief executive Kate Shoesmith said interest rate cuts would help stabilise costs, but called for coordinated action from government, the Bank of England and business to support jobs growth.