Recruitment agencies across the United Kingdom have reported a gentle easing in the jobs market downturn during March 2026, marking the latest chapter in a year that has seen hiring activity begin to level off despite persistent global pressures. The latest data from the KPMG and REC UK Report on Jobs, compiled by S&P Global, reveals that permanent staff placements experienced only a slight contraction for the second consecutive month, with the pace of decline holding steady from the previous period.
Similarly, KPMG UK noted that temporary staff billings dropped at a modest rate that proved slower than in February, pointing to a broader softening in the overall slowdown.
Demand for workers continued to weaken at the close of the first quarter, yet the reduction occurred at the gentlest rate observed in ten months.
KPMG pointed out that this marked the third straight month of improvement in the decline, suggesting that the jobs market may be finding a firmer footing.
Both permanent and temporary labour needs eased at marginally reduced speeds, reflecting a cautious but not collapsing environment for employers. Pay pressures also moderated noticeably.
KPMG also indicated that increases in starting salaries for permanent roles slowed to their weakest level in five months, rising only marginally amid growing numbers of available candidates and tighter spending constraints among businesses.
Temporary wages followed a similar path, expanding at a subdued pace that represented a four-month low.
Recruiters attributed these restrained rises to an expanding pool of job seekers and more disciplined budgets.
On the supply side, the availability of candidates surged at the fastest clip seen so far in 2026. Both permanent and temporary worker numbers grew more sharply, driven largely by recent redundancies and a general scarcity of openings that has encouraged more people to enter the market.
Growth in permanent staff availability continued to outstrip that for temporary roles.
Regional patterns showed some divergence. The South of England and the Midlands witnessed sharper drops in permanent placements, which were partly offset by modest gains in London and the North of England.
For temporary roles, London recorded the most pronounced decline in billings, while the Midlands stood out as the sole English region posting an increase—and at the strongest rate recorded this year.Sector-specific trends highlighted pockets of resilience.
Engineering and construction categories saw improved demand for permanent workers, bucking the broader trend. The remaining eight monitored sectors experienced contractions, with hospitality and retail leading the downturn.
In temporary recruitment, only blue-collar roles posted a marginal uptick in demand, whereas retail and hospitality positions contracted at accelerated and significant rates.
Commentators noted that global uncertainties, particularly the ongoing conflict in the Middle East, have introduced headwinds but have not derailed an emerging stabilization.
Businesses appear to be advancing some previously postponed recruitment initiatives, yet many remain wary of committing fully until the wider economic consequences become clearer.
There is a risk that prolonged caution could push hiring and investment decisions further into the future, postponing any real recovery.
Prospects for the remainder of 2026 appear balanced on a knife-edge, with confidence expected to play a decisive role.
Both households and companies hold reserves that could fuel spending and growth if conditions improve, offering particular relief to consumer-facing industries such as retail and hospitality.
KPMG UK has now concluded that policymakers could support this by addressing underlying business cost pressures and adopting more practical approaches to employment regulations, helping to ease the cost-of-living challenges that continue to weigh on the economy.
Overall, the March data paints a picture of a UK labor market that is holding its ground more firmly than in recent quarters, even as challenges persist. While full recovery remains some way off in 2026 at least, the softening in declines offers a cautious note of optimism for recruitment professionals and employers. But the broader geopolitical landscape, including the US-Iran conflict that just can’t seem to de-escalate, clearly poses considerable challenges for the UK and other major European economies.