The UK recruitment sector edged closer to stability in February 2026, with permanent hiring experiencing its mildest contraction in nearly three years and overall demand for workers easing at the gentlest pace since last May. These encouraging signals emerged from the latest KPMG and REC UK Report on Jobs, compiled by S&P Global based on feedback from approximately 400 recruitment consultancies between 10 and 23 February.
The report from KPMG indicated that permanent staff appointments declined only slightly during the month, marking the weakest drop recorded since March 2023.
Recruiters reported mixed conditions, with some noting subdued activity while others observed a modest uptick in employers’ readiness to bring on new team members.
Temporary billings also fell modestly, reversing a minor gain seen at the beginning of the year.Job vacancies across the country continued to contract, yet the pace of decline was the slowest in nine months.
A gentler reduction in permanent openings helped offset a marginally faster drop in temporary roles.
This softening in demand contraction provided a rare bright spot amid ongoing economic uncertainty.
Pay growth moderated noticeably. Starting salaries rose at their slowest rate since October 2025, well below the long-term survey average, after reaching a 17-month peak in January.
Temporary wage increases also slowed, remaining modest overall.
While competition for specialised skills continued to push wages upward in certain areas, recruiters highlighted that growing candidate pools had helped restrain inflationary pressures.
Overall pay inflation stayed beneath historical norms, offering some relief to employers.
On the supply side, candidate availability surged sharply in February, accelerating from January’s one-year low.
The increase in permanent job seekers was particularly strong, more than compensating for the weakest rise in temporary candidates since early 2025.
This expansion in labour supply, though still below 2025 averages, pointed to improving conditions for businesses seeking talent.
Regional patterns varied. Permanent placements contracted more slowly in London and the South of England, while the North saw an outright increase. The Midlands, however, posted its first decline in three months.
Temporary billings fell in most English regions except the Midlands, where growth was the weakest since August 2025.
Sector-wise, engineering stood out as the sole area with rising demand for permanent staff; every other monitored category experienced falls, led by steep drops in retail and hotels & catering.
Temporary vacancies declined broadly, with retail recording the sharpest contraction and engineering the mildest.
Jon Holt, Group Chief Executive and UK Senior Partner at KPMG, described the data as the strongest indication of improvement in three years, with hiring nearing positive territory.
He cautioned, however, that global events could stall momentum, noting that resilience has become the new norm for businesses.
Neil Carberry, Chief Executive of the REC, viewed the results as evidence that the worst of the hiring slowdown may have passed, though challenges remain amid international instability.
He emphasized the need for policies that boost business and consumer confidence—such as lowering operating costs and refining employment legislation—to unlock sustainable job creation.
As the UK navigates persistent economic headwinds, February’s figures suggest a labour market gradually regaining its footing. Sustained stability will depend on broader confidence returning to boardrooms and households. The report underscores that while recovery remains fragile, the direction of travel offers cautious optimism for the months ahead.