Recruitment hiring loses momentum, even as UK services growth strengthens
Just as the UK recruitment market appeared to be finding its feet, November’s figures have delivered a reminder of how fragile the recovery remains.
In October’s snapshot, we highlighted two consecutive months of permanent placement growth, six months of rising temporary billings and the first increase in private-sector permanent vacancies in over two years.
Those were encouraging signs. But the latest figures show that employers are still hesitant to commit to hiring.
Permanent placements and temporary billings both returned to decline in October, with rising costs and economic uncertainty weighing on recruitment decisions.Yet there’s an interesting contrast.
UK services activity accelerated to an eight-month high, and services employment increased for the first time in just over two years. Meanwhile, the overall decline in recruitment vacancies eased to its slowest pace in more than two years.
So, is the recruitment recovery stalling, or is the market simply experiencing another period of adjustment?
Our November UK Recruitment Market Snapshot brings together four major reports – the KPMG & REC UK Report on Jobs, S&P Global UK Services PMI®, S&P Global UK Construction PMI® and J.P. Morgan Global Manufacturing PMI® – to explore what’s changing and what it means for recruitment agencies.
The message this month? Business activity may be improving, but confidence to hire hasn’t caught up.
MARKET SNAPSHOT: 5 Key Numbers
46.6 – Permanent Placements Index
Permanent placements returned to decline after two months of growth, with the second-sharpest fall recorded so far in 2026.
48.9 – Temporary Billings Index
Temp billings fell for the first time since March, ending a six-month run of growth.
48.7 – Total Vacancies Index
Overall vacancies continued to decline, but at the slowest rate in 26 months.
52.8 – UK Services PMI
Services activity grew at its fastest pace since February, with employment rising for the first time in just over two years.
43.6 – UK Construction PMI
Construction activity contracted at its fastest pace since June, driven by a sharp downturn in housebuilding.
The figures reflect October 2026 survey data, published in November. PMI and recruitment index readings above 50 generally indicate growth, while readings below 50 indicate contraction.
Permanent recruitment: the recovery hits a setback
After two consecutive months of growth, permanent recruitment has returned to contraction.
The latest KPMG & REC UK Report on Jobs recorded a Permanent Placements Index of 46.6 in October, down from 50.9 in September. That represents a significant change in direction.
Permanent placements fell at their second-fastest rate of 2026 so far, with recruiters reporting that employers were delaying hiring decisions or scaling back recruitment plans. Rising operating costs, borrowing costs and economic uncertainty were among the reasons cited.
However, the regional picture wasn’t entirely negative.
- London: 51.1 – marginal growth in permanent placements.
- North of England: 50.1 – a fractional increase.
- Midlands: 45.0 – a solid decline.
- South of England: 42.6 – the sharpest regional fall.
It’s a reminder that the recruitment market isn’t moving uniformly.
While some employers are still investing in permanent staff, others have become more cautious. The positive momentum seen in September hasn’t disappeared everywhere, but it has proved vulnerable to changes in confidence.
For permanent recruiters, this makes client relationships and visibility of future hiring plans particularly important.
Understanding which businesses are genuinely preparing to recruit – rather than simply discussing potential vacancies – could help agencies focus their efforts more effectively.
Temporary recruitment: six months of growth come to an end
Temporary recruitment has been one of the more consistent positive stories throughout this year’s market snapshots.
From April to September, temp billings increased for six consecutive months.
October brought that run to an end. The Temporary Billings Index fell from 50.9 in September to 48.9 in October, signalling a modest reduction in billings.
Recruiters linked the decline to the completion of existing contracts and a shortage of new temporary opportunities. Some employers were also reluctant to commit to new projects while economic conditions remained uncertain.
The regional differences were striking.
The North of England continued to record strong temp billings growth, with an index of 54.8.
Elsewhere, billings declined:
- London: 46.9.
- Midlands: 47.7.
- South of England: 45.4.
For agencies, this is a change worth watching.
Temporary recruitment can provide employers with flexibility when they are reluctant to make permanent commitments. But it isn’t immune to weaker business confidence or delayed projects.
Temp remains an important part of the recruitment market, but agencies can’t assume demand will keep growing without interruption.
Maintaining a healthy pipeline, understanding contract end dates and staying close to clients’ project plans will be especially valuable.
Vacancy demand: still falling, but the decline continues to ease
One of November’s more encouraging findings comes from the vacancy data. Although placements and billings weakened, the decline in overall demand for staff continued to moderate.
The Total Vacancies Index edged up from 48.5 in September to 48.7 in October. It remains below the neutral 50.0 level, meaning vacancies are still falling overall.
However, this was the slowest reduction in 26 months.
There was also a difference between permanent and temporary demand.
Permanent vacancies continued to decline, but at their weakest rate since August 2024.
Temporary vacancies, meanwhile, increased fractionally after two months of contraction.
The private-sector figures also offered some resilience. Private-sector permanent vacancies continued to increase, although more slowly than in September. Private-sector temporary vacancies also rose marginally.
Public-sector demand for both permanent and temporary workers continued to fall.
(The private- and public-sector breakdowns are not seasonally adjusted, so they should be considered separately from the seasonally adjusted overall vacancy index).
For recruiters, the distinction between vacancies and placements matters.
Employers may still need people, but that doesn’t necessarily mean they’re ready to make hiring decisions immediately.
Some opportunities may be taking longer to convert, while others may depend on budget approvals or greater certainty about future costs.
Agencies that can help clients clarify requirements and make informed hiring decisions may be better positioned when confidence improves.
Which recruitment sectors are still showing demand?
Despite the wider slowdown, recruitment opportunities haven’t disappeared.
The latest sector data shows continued demand for particular skills and job categories.
For permanent recruitment, six of the ten monitored sectors recorded rising vacancies.
IT & Computing and Engineering led the growth, followed by Accounting & Financial, Construction, Executive & Professional, and Blue Collar roles.
Retail and Hotel & Catering experienced the steepest falls in permanent demand.
Temporary recruitment showed a narrower spread of growth.
Four sectors recorded increased vacancies:
- Blue Collar
- IT & Computing
- Nursing, Medical & Care
- Engineering
Blue Collar roles recorded the strongest increase, while Retail saw the steepest reduction in temporary opportunities.
These findings reinforce a theme that has run through several editions of our market snapshot.
Specialist demand can remain resilient even when the wider recruitment market is under pressure.
For agencies, sector knowledge and established client relationships may be more valuable than broad market coverage.
Technology, engineering, skilled blue-collar and healthcare recruitment remain areas worth monitoring closely, although demand will still vary between employers and regions.
Candidate availability and pay: more choice, but specialist skills remain valuable
Candidate availability increased sharply again in October.
The Total Staff Availability Index rose to 59.4, up from 57.2 in September.
That marks 44 consecutive months of increasing candidate supply.
Recruiters reported that redundancies and fewer job opportunities were contributing to the growing pool of available workers.
Permanent candidate availability increased at a faster pace, while temporary candidate numbers also continued to rise.
For agencies, this may create opportunities to identify and engage skilled candidates who could be valuable to clients as hiring activity returns.
But more candidates doesn’t necessarily mean every vacancy is easier to fill.
The report continued to identify shortages in specialist areas, including engineering, technology, finance and certain skilled trades.
Starting pay also increased at a slightly faster rate for both permanent and temporary staff, as employers competed to secure high-calibre candidates.
However, pay inflation remained below its historical averages.
The practical takeaway? Recruiters may have access to a larger candidate pool, but specialist skills and candidate quality still matter.
This is a useful time to strengthen talent networks, maintain regular candidate contact and prepare for opportunities that may emerge as employer confidence changes.
UK Services PMI: stronger growth finally translates into jobs
The UK services sector provided one of the most positive developments in November’s research. The S&P Global UK Services PMI Business Activity Index rose to 52.8 in October, up from 52.1 in September. That was the strongest rate of expansion since February and marked four consecutive months of growth.
New business also increased at its fastest pace since January, supported by improving domestic demand and stronger order books.
But the most important development for recruiters was employment.
Services employment increased for the first time in just over two years.
The Employment Index reached 50.4, signalling a marginal rise in staffing levels.
This is a meaningful change from October’s market snapshot, when services activity was growing but employment continued to decline.
Some businesses reported taking on additional staff following new project wins and increased workloads.
Computing and IT services remained a particularly strong area of business activity, with new orders in that segment also improving.
However, the improvement in hiring was modest. Some employers continued to freeze recruitment or leave vacancies unfilled, with cost pressures and AI adoption among the reasons cited.
The sector also faced rising operating expenses. Input price inflation accelerated to a five-month high, driven by higher fuel, transport, energy and wage costs.
For recruitment agencies, the services data is encouraging – but it needs to be interpreted carefully.
It suggests that some businesses are becoming more confident about investing in additional capacity.
The opportunity is to identify which clients are moving from increased workloads to actual hiring.
For some, that may mean permanent appointments. For others, temporary or contract workers could provide a way to meet new demand while retaining flexibility.
UK Construction PMI: housebuilding weakness deepens
Construction delivered a more difficult picture. The S&P Global UK Construction PMI fell from 46.1 in September to 43.6 in October. That marks 22 consecutive months of declining activity, with the latest contraction the steepest since June.
The most significant weakness came from residential construction.
The Housing Activity Index dropped to 35.1, down from 40.7 in September, signalling the fastest decline in housebuilding activity so far this year.
Commercial construction also weakened, with an index of 46.3.
Civil engineering was comparatively more resilient, improving from 42.2 to 45.9, although activity remained in contraction.
Some construction firms reported opportunities linked to infrastructure spending, including data centres, energy networks and utilities projects.
However, these pockets of activity weren’t enough to offset the wider downturn. New orders fell at their fastest pace since June.
Construction employment also continued to decline, with the sharpest reduction in staffing numbers for ten months.
Subcontractor usage weakened further, while input costs accelerated sharply.
For construction recruiters, this is a challenging environment. Broad-based hiring demand remains under pressure, particularly in housebuilding. But specialist opportunities may still exist around infrastructure, engineering, utilities and individual projects.
The priority is to follow confirmed work and project pipelines, rather than relying on a general construction recovery.
Global manufacturing: growth continues, but cost pressures are rising
The international manufacturing picture remained positive in October. The J.P. Morgan Global Manufacturing PMI registered 52.6, down slightly from September’s 53.0.
Although growth eased, the index remained above 50 for the fifteenth consecutive month. Global manufacturing output and new orders continued to expand, with growth across consumer, intermediate and investment goods producers.
Employment also increased for a fourth consecutive month worldwide. However, the report highlighted growing pressure from material shortages, longer supplier delivery times and rising input costs.
Manufacturing input cost inflation accelerated to its fastest pace since June.
For recruitment agencies, this provides useful context for businesses operating in manufacturing and engineering supply chains.
But it’s important to distinguish global manufacturing performance from UK recruitment demand.
A rise in worldwide manufacturing employment does not automatically mean UK manufacturers are increasing headcount.
What the report does suggest is that international industrial activity remains relatively resilient, even as businesses face supply chain and cost challenges.
For agencies working with UK manufacturers, the most useful conversations will be about individual clients’ order books, production plans, skills gaps and capacity requirements.
What does this mean for recruitment agencies? November’s figures bring a change in tone from October.
Last month, we were asking whether the recovery was building momentum. This month, the question is whether employers have enough confidence to sustain it.
Permanent placements and temporary billings have both returned to decline.
Construction is struggling, and candidate availability is rising again.
Yet there are still encouraging signs.
Overall vacancy demand is declining at its slowest pace in more than two years. Private-sector vacancies remain positive in some categories. UK services growth has accelerated, and services employment has finally returned to growth.
So, what should recruitment agencies take from this?
The market isn’t moving in one direction. And neither are employers’ hiring needs.
For established recruiters, this means staying close to the detail.
Which clients have confirmed projects? Which businesses are winning new work? Where are specialist skills still difficult to find? And which employers need additional capacity but remain hesitant about permanent recruitment?
For perm-led agencies, there may also be value in broadening the conversation.
If a client isn’t ready to commit to a permanent appointment, could temporary or contract recruitment provide a practical alternative?
Equally, if a client has a longer-term need, a permanent placement may still be the right solution.
Being able to discuss both options could help agencies support clients more effectively.
For perm-only agencies considering temporary recruitment, the opportunity isn’t simply about chasing a growing market.
It’s about having another service available when clients need flexibility.
Of course, supplying temporary workers brings additional responsibilities.
Agencies need to manage payroll, client payment terms, credit control and the cash flow required to pay workers before invoices are settled.
That’s why having suitable recruitment funding, invoice finance and back-office support in place can be important.
The right operational foundations can help agencies respond to opportunities without putting unnecessary pressure on working capital.
“Last month’s figures gave us some genuine reasons for optimism, so it’s disappointing to see permanent placements and temp billings fall again.
But I don’t think agencies should overlook the more encouraging signals beneath the headline numbers. Vacancy declines are easing, services businesses are growing, and some employers are starting to recruit again.
What this tells us is that confidence remains fragile. Clients may still need people, but they’re thinking carefully about when and how they hire.
For recruitment agencies, that makes flexibility and strong client relationships more important than ever. Being able to offer permanent, temporary or contract recruitment gives you more ways to support businesses as their needs change.”
Ashley Lyas, Director, QUBA Solutions
The QUBA view: confidence may fluctuate, but flexibility remains valuable
If there’s one lesson from this year’s recruitment market snapshots, it’s that recovery isn’t always straightforward.
We’ve seen temporary recruitment strengthen while permanent placements declined. We’ve seen permanent recruitment return to growth after a prolonged downturn. And now we’ve seen both measures weaken again, even as parts of the wider economy improve.
For recruitment agencies, that makes adaptability especially valuable.
The opportunity isn’t necessarily to predict exactly when the market will recover.
It’s to build a business that can respond to different client needs as conditions change.
That could mean expanding an existing temp desk, introducing contract recruitment alongside permanent placements or strengthening relationships with clients in more resilient sectors.
It also means making sure growth is financially manageable.
Temporary recruitment can create additional cash flow demands because workers need to be paid before clients settle their invoices.
Invoice funding and recruitment-specific back-office support can help agencies manage those demands.
And when comparing invoice factoring companies or other invoice financing options, it’s worth considering the full package – not just the funding available, but also payroll, credit control and the practical support needed to run a temp desk.
The market may be uncertain. Your ability to support clients doesn’t have to be.
Considering adding temp or contract recruitment?
If your clients are asking for flexible staffing solutions, but payroll, funding or administration is holding you back, QUBA can help.
We provide recruitment agencies with the funding and back-office support needed to supply temporary and contract workers, manage cash flow and focus on growing their business.
Talk to QUBA about making temporary recruitment part of your offering.
Research sources: KPMG & REC UK Report on Jobs (9 November 2026), S&P Global UK Services PMI® (4 November 2026), S&P Global UK Construction PMI® (5 November 2026) and J.P. Morgan Global Manufacturing PMI® (2 November 2026). All reports cover October 2026 survey data.
