Hiring activity across the United Kingdom weakened further in May as businesses became increasingly cautious about recruiting permanent staff, reflecting growing concerns over economic uncertainty and rising operating costs.
A new labor market survey released by KPMG and the Recruitment and Employment Confederation (REC) found that permanent job placements recorded their steepest decline in nearly a year. The report also noted that permanent recruitment has been shrinking continuously for 44 months, marking the longest downturn since the survey began in 1997.
The slowdown comes as employers grapple with an uncertain global environment, including concerns linked to the conflict involving Iran, which has added pressure to business costs and future planning.
According to the survey, many companies are postponing long-term hiring decisions while seeking greater flexibility in managing their workforce. As a result, demand for temporary workers increased during May, reaching its strongest level since early 2023.
Jon Holt, Chief Executive of KPMG UK, said businesses are responding cautiously to ongoing domestic and international challenges. He noted that while some firms continue to recruit, many are delaying permanent appointments and relying more heavily on temporary contracts until economic conditions become clearer.
The report also found that the number of candidates available for work continued to rise, suggesting a growing pool of job seekers. At the same time, overall vacancies declined, with permanent positions accounting for most of the drop in demand.
Researchers said the findings were based on responses gathered from around 400 recruitment agencies between May 12 and May 22.
The latest data points to a labour market that remains under pressure as employers balance recruitment needs against concerns over growth prospects, business costs and geopolitical developments. While temporary hiring has provided some support, the continued weakness in permanent recruitment highlights the cautious mood among UK businesses.