• Redundancies reported, hitting demand for staff and placements
• Pay growth weakens at start of 2025
• Staff availability increases, albeit to a weaker degree

Commenting on the latest survey results, Jon Holt, Group Chief Executive and UK Senior Partner KPMG, said: “Businesses continue to hold back on recruitment, leading to permanent and temporary placements falling steeply again in January. “While firms are still willing to pay for top talent, increased staff availability weighed on pay growth. This cooling may have encouraged the Bank of England’s decision to cut rates last week. “It is unlikely that we will see any significant improvements in the survey data over the near term, as hiring stays muted and staff availability continues to rise. Yet business leaders are ready for growth signals and gradual rate cuts could start to translate into greater confidence to plan and invest.”

The main findings for January are:

Fastest decline in temp billings since mid-2020 The first KPMG/REC Report on Jobs survey of 2025 revealed a further steep drop in permanent placements as falling demand for workers and a general air of business uncertainty weighed on the UK labour market. Extending the current period of contraction to 28 months, January’s survey showed that permanent placements declined at a pace little changed on December’s 16-month record. There were again reports of a reluctance to hire staff given upcoming changes to the cost of employing staff. Temp billings meanwhile fell to the greatest degree in over four-and a-half years as the pace of contraction accelerated noticeably since the end of 2024.

Pay inflation weakens at the start of 2025 Permanent salary growth softened during January, easing to a modest level that remained amongst the slowest in the current sequence of inflation (that began in March 2021) and was well below the historical trend. Although firms were again willing to pay higher starting salaries for good quality candidates, an increased availability of staff tended to weigh on pay growth. Temp rates rose to an even slower degree, with inflation marginal and the weakest in the current four-month growth sequence.

Vacancies continue to tumble Demand for staff continued to decline noticeably during January, overall falling to the greatest degree since August 2020. Vacancy numbers fell especially sharply for permanent workers, with the rate of contraction accelerating for the fifth successive month to a near four-and-a-half-year peak. That said, temp workers also fell at a steeper pace (the sharpest recorded by the survey since June 2020).

Staff availability continues to rise, but to slower degree Amid widespread reports of a growing volume of redundancies at firms in January – linked in turn to challenging market conditions for businesses – both permanent and temporary staff availability increased. However, the overall rate of growth softened since December to their slowest in just under a year.

Permanent placements again fall at considerable rate UK recruitment consultants signalled a further reduction in permanent staff placements during January, in line with a trend that began in October 2022. The rate of contraction was again steep, easing only slightly since December when placements fell to the steepest degree in well over a year. Panellists reported unease amongst firms to hire staff, linked to economic uncertainty and the government’s changes to national insurance and employment rights legislation. A lack of suitable candidates was also noted.

Permanent vacancies In January, permanent staff vacancies declined across all the categories covered by the survey. Executive/ Professional recorded the steepest contraction again.

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