UK Hiring Falls in October as Employers Pull Back, but Starting Pay Rises Faster
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Britain’s jobs market cooled in October 2026. Recruiters placed fewer people into permanent jobs for the first time in four months, and temporary hiring fell too, as employers worried about the economy and rising costs. At the same time, starting pay rose faster, because firms still had to compete for skilled workers in short supply. The mixed picture, fewer hires but higher pay, is one reason the Bank of England is watching wages closely after raising interest rates to 4% last week.
What happened
The KPMG and Recruitment and Employment Confederation (REC) UK Report on Jobs, published on Monday, November 9, 2026, showed the permanent placements index fell to 46.6 in October, down from 50.9 in September. A reading below 50 means placements are falling, while a reading above 50 means they are rising. It was the first fall in four months, the lowest reading since May, and the second fastest contraction recorded in 2026.
Temporary billings also slipped below 50, falling to 48.9 from 50.9 in September, the first fall since March. The survey is compiled by S&P Global from around 400 recruitment and employment consultancies, and the responses were collected between October 12 and 26, before the Chancellor’s Budget on October 28 and before the Bank of England raised Bank Rate to 4% on November 5.
Pay moved in the opposite direction to hiring. Starting salaries for permanent staff rose at a faster pace in October, and average pay for temporary workers also increased more quickly, as employers competed for high calibre candidates who remain in short supply. Even so, the report noted that pay growth on both measures stayed below its long run average.
The slowdown was not the same everywhere. Demand for permanent staff still rose in six of ten sectors, led by IT and computing and by engineering, while retail and hotel and catering fell the most. The number of people available for work rose for the 44th month in a row, and official figures put total UK vacancies at 691,000 in the three months to September.
Jon Holt, group chief executive and UK senior partner at KPMG, said October’s figures suggest employers are hiring cautiously while still willing to pay more for the skills they need.
The survey lands just days after the Bank of England raised Bank Rate by a quarter point to 4%, its first rate rise since August 2023, with eight of nine policymakers backing the move. For more on that decision, see Bank of England raises rates to 4% in first hike since 2023. Reuters reported that investors see at least two more quarter point rises in 2027.
Why it matters for beginners
A jobs survey like this is an early signal. Official jobs figures take longer to publish, while this survey of recruiters shows what employers were actually doing in October. When placements fall, it means fewer people are landing new jobs, and job searches can take longer.
The pay side matters just as much. If employers keep paying more for scarce skills even while they hire less, wage growth can stay strong. That is a problem for the Bank of England, because rising pay can feed into higher prices and keep inflation above its 2% target. It is one reason the Bank raised rates last week, and why it says it will watch pay closely at every meeting.
For ordinary households, the picture is mixed. A weaker hiring market makes it harder to change jobs or find work, but if you have skills that are in short supply, employers may still compete for you with better pay. Higher interest rates, meanwhile, make borrowing more expensive, so a mortgage or loan costs more, while savers may earn a little more.
What to watch next
The official UK labour market figures arrive on Tuesday, November 17, and will show whether the official unemployment rate, currently 4.7%, and vacancies confirm the survey’s cooling signal.
The Bank of England’s next rate decision is due on December 17, 2026. By then it will have the official jobs data and more inflation figures, and it will judge whether pay growth is easing or staying high enough to need another rise.
Also watch the US October consumer price report on Tuesday, November 10. It is the week’s main event for global markets, and it will shape expectations for the Federal Reserve’s December meeting.
FAQ
What is the KPMG and REC Report on Jobs?
It is a monthly survey of around 400 UK recruitment and employment consultancies, compiled by S&P Global. It tracks how many people recruiters place into permanent and temporary jobs, and how pay is moving. Because it comes out quickly, it is often the first signal of where hiring is heading.
What does a reading of 46.6 mean?
The index runs on a scale where 50 separates growth from contraction. A reading of 46.6 means permanent placements fell in October, and the further below 50, the faster the fall. September’s reading of 50.9 meant placements were still growing slightly.
Why is pay rising if hiring is falling?
Employers are hiring fewer people, but they still need certain skills, and those workers are in short supply. To win them, firms are offering higher starting salaries. At the same time, more people are looking for work, so the market is loosening overall, but pay for scarce skills can still rise.
How does this connect to interest rates?
The Bank of England raised Bank Rate to 4% on November 5 because inflation is rising, driven by energy prices. If pay keeps rising too, it can push prices up further, which could lead to more rate rises. If pay growth eases, the Bank may be able to hold rates steady.
When is the next official UK jobs data?
The Office for National Statistics publishes its next labour market release on Tuesday, November 17, 2026. It will include the unemployment rate and vacancy numbers.
What is Bank Rate?
Bank Rate is the Bank of England’s main interest rate. It shapes what banks charge on loans and what they pay on savings, so a change reaches ordinary households fairly quickly.
Sources
Reuters, November 9, 2026, UK employers report weaker hiring but stronger pay growth in October. British Journal, November 9, 2026, Permanent hiring falls back to 46.6 in October, while the pay needed to land scarce staff keeps rising.
This article is for general information and education only. It is not legal or financial advice.
