Hiring picks up at fastest pace in four years as jobs market flickers back to life

Britain's labour market showed further signs of recovery last month, with permanent staff placements rising at the fastest pace in four years, according to the KPMG and Recruitment and Employment Confederation Report on Jobs published on Thursday.

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The survey's index of permanent placements rose to 50.9 in September from 50.5 in August, the highest reading since September 2022. Readings above 50 denote growth, and it was the second month in a row of improvement. Jon Holt, KPMG's group chief executive, said: "For the second month in a row we are seeing the jobs market starting to flicker back to life, with businesses increasing their hiring across both permanent and temporary roles."

Permanent starting salaries increased, but at a slower pace than in August, which may offer tentative reassurance to Bank of England officials trying to gauge domestic inflation pressure. Overall demand for staff still contracted, though at the weakest pace since August 2024. Recruiters reported the strongest demand for IT and computing and engineering roles, while retail and hospitality saw the sharpest falls in demand.

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For the second month in a row we are seeing the jobs market starting to flicker back to life.Jon Holt, KPMG

The Bank's rate-setters have been watching the labour market closely: some had thought a cooling jobs market would help prevent high inflation becoming entrenched as energy prices rise, stoked by the US-Iran war, Reuters reported. The Report on Jobs is viewed as a leading indicator of the labour market, and the figures come ahead of the Chancellor's first Budget on 28 October.

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The survey adds to signs of resilience in the economy after a protracted slowdown, though employers remain cautious about the outlook and the direction of policy at the Budget.