KPMG noted that the latest monthly snapshot of the UK labor market reveals a mixed picture, with permanent staff appointments declining at the fastest rate since January while temporary hiring showed tentative signs of life. According to the May 2026 KPMG and REC UK Report on Jobs, uncertainty linked to the conflict in Iran and climbing business expenses prompted many employers to pull back on long-term recruitment decisions during April.
Data gathered between 9 and 24 April from around 400 recruitment consultancies, compiled by S&P Global, found that overall demand for workers eased slightly compared with the previous month but still contracted for the 30th consecutive month.
KPMG added that the pace of decline was the mildest in nearly a year, yet permanent vacancies continued to fall more sharply than temporary ones.
In response, some organisations shifted towards flexible staffing to maintain momentum on expansion plans without committing to permanent headcount.
Temporary billings posted a modest rise—the first in three months—signaling a marginal preference for short-term contracts amid the current climate of caution.
KPMG also mentioned that candidate availability, meanwhile, surged again as redundancies and subdued hiring combined to swell the pool of jobseekers.
Although the increase in supply was less pronounced than in March, it remained significant and outpaced typical patterns seen throughout much of 2025. Pay pressures stayed subdued.
Starting salaries for permanent roles rose for another month, but the pace of growth, while slightly faster than the five-month low recorded in March 2o26, stayed well below long-term averages. Temporary wage growth followed a similar path, edging higher yet still reflecting historically weak momentum.
Regional differences stood out clearly. Permanent placements dropped sharply in the Midlands and southern England but improved markedly in London and the North.
Temporary billings followed the opposite pattern, rising in the Midlands and South while slipping in the capital and northern regions.
Sector trends also varied. Engineering was the only category to record stronger demand for permanent staff, with solid growth. In contrast, hotel and catering along with retail saw the steepest contractions in permanent opportunities.
On the temporary side, nursing, medical and care roles together with blue-collar positions enjoyed increased demand, while engineering vacancies held steady and retail recorded the largest fall.
Jon Holt, Group Chief Executive and UK Senior Partner at KPMG, noted that early green shoots in the jobs market appeared to have been interrupted by the fallout from the Iran conflict.
He observed that although conditions were more supportive than during much of 2025, many leaders were deferring permanent hires and opting for greater workforce flexibility to protect against further economic shocks.
Neil Carberry, Chief Executive of the Recruitment & Employment Confederation, highlighted that improving momentum earlier in the year had been tempered by the Gulf situation’s potential effects on inflation, borrowing costs and supply chains.
He emphasised the resilience of temporary and contract work, which he said remained vital for business continuity and job creation.
Carberry added that government action to ease the cost of doing business—particularly by avoiding poorly designed employment rules—could encourage more confident permanent hiring.
The research report, based on diffusion indices where readings above 50 signal growth and below 50 indicate contraction, underscores the labour market’s ongoing sensitivity to both domestic cost pressures and international instability. KPMG concluded in the research report that while temporary hiring offers a buffer, sustained recovery in permanent employment will likely depend on clearer economic signals in the months ahead.