Following some signs of encouragement at the end to the first quarter, the employment picture across the capital deteriorated as permanent placements recorded a fresh decline, according to the latest KPMG and REC UK Report on Jobs.
Employers readopted a cautious approach to recruitment amid economic uncertainty and weak demand. Temporary billings also fell in April, but at a marginal rate, the weakest in the current 16-month sequence of decline.
Vacancies continued to fall, with rates of contraction quickening over the course of the month.
Meanwhile, redundancies remained a key driver of the continued expansion of supply for both permanent and temporary candidates.
Turning to pay, pressures across the capital remained historically subdued. However, while starting salaries awarded to permanent workers rose at the weakest rate in three months, temporary wages were raised at a solid pace that was the sharpest in the year-to-date.
The KPMG and REC, UK Report on Jobs: London is compiled by S&P Global from responses to questionnaires sent to around 100 recruitment and employment consultancies in London.
Anna Purchas, London Office Senior Partner at KPMG UK, said: “After a short-lived period of renewed optimism, London’s job market has softened once again, with permanent placements declining and vacancies falling at a sharper pace. While employers are clearly exercising caution in the face of ongoing economic uncertainty, the capital continues to show relative resilience compared to other UK regions, underpinned by its diverse economy and demand in key sectors such as financial services, technology and creative industries.
“The increase in candidate availability – largely the result of redundancies – is intensifying competition for roles but also expanding the recruitment pool for businesses looking to bring in fresh talent. As the market recalibrates, employers will need to strike a careful balance between cost management and securing the right skills to drive long-term growth.”
Following a rise for the first time in eight months during March, recruitment consultancies based in the capital recorded a fall in the number of people placed in permanent roles during April. Market instability and fewer vacancies led to reduced hiring activity, anecdotal evidence noted.
The rate of contraction across London was modest and the weakest among the four monitored English regions, however. In contrast, the South of England experienced the strongest rate of reduction.
April data revealed only a marginal decline in billings received from temporary workers in London. The rate of decrease eased for a third consecutive month to the slowest in the current 16-month sequence of contraction. Where recruiters recorded a fall, it was attributed to high hiring costs for temporary workers and reduced business requirements.
All four tracked English regions reported a drop in temporary billings, with London experiencing the shallowest downturn. The contraction was most pronounced in the South of England.
Vacancies across the capital fell sharply in April, with the downturns in both permanent and temporary vacancies deepening compared to the previous month. While London recorded the smallest decline in permanent vacancies among the four monitored English regions, temporary vacancies fell at the second-fastest pace, surpassed only by the South of England.
Demand for both permanent and short-term workers also deteriorated at the UK level, and at stronger rates than observed in March.
As has been the case since December 2022, the availability of candidates for permanent roles rose across the capital in April. The rate of increase eased notably from March’s recent high, but was marked overall. Redundancies and reduced recruitment activity were said to have driven the latest uptick.
When compared to the four monitored English regions, only the South of England recorded a slower expansion in permanent staff availability than seen in London. Meanwhile, their counterparts in the North registered the fastest upturn.
Recruiters in London reported a rapid increase in the availability of temporary staff in the capital, driven by reports of redundancies and a growing preference among temporary workers for permanent positions. After hitting a four-year high in February, the seasonally adjusted Temporary Staff Availability Index edged down to the lowest level recorded in 2025 so far. However, the rate of increase remained comfortably above the long-run series average.
Of the four monitored English areas, London recorded the second-weakest increase in temporary staff availability, ahead of the Midlands
In line with the trend that began in March 2021, salaries awarded to new permanent joiners in London rose further in April. However, the rate of pay growth eased to a three-month low.
Among the four monitored English regions, the Midlands recorded the fastest rise in starting salaries, followed by London. Meanwhile, the North of England was the only region where the respective seasonally adjusted index increased, surpassing the neutral 50.0 mark for the first time in three months.
Hourly rates for short-term workers across London rose for a seventh straight month in April. The pace of temporary wage inflation was the fastest recorded so far this year and solid overall. Anecdotal evidence attributed the latest increase to recent policy changes that took effect at the start of April.
In fact, all four monitored English regions saw temporary wages rise at stronger rates in the latest survey period, with the South of England leading the upturn.
Neil Carberry, REC Chief Executive, said: “Given the bow wave of costs firms faced in April, maintaining the gradual improvement in numbers we have seen over the past few months is on the good end of our expectations for the UK. While we are yet to see real momentum build, hopes of an improving picture across the UK in the second half of the year should be buoyed a bit by today’s nationwide data.
“Recruiters in the Capital are actively struggling to fill some roles in key sectors such as accounting and finance, construction, hotel and catering, IT and engineering because of a lack of skilled workers, although these labour shortages are markedly less than elsewhere in the country.
“Last week’s interest rate move is well-timed, offering some relief for businesses, with pay pressures now more contained.
“The biggest single drag factor on activity right now is uncertainty. Some of that can’t be helped, but payroll tax costs and regulation design is in the government’s gift. Businesses have welcomed positive discussions with Ministers on the Employment Rights Bill, but now it is time for real changes to address employers’ fears and boost hiring. A sensible timetable and practical changes that reduce the red tape for firms in complying with the Bill will go a long way to calming nerves about taking a chance on someone.”
