The availability of candidates in the labour market has risen at its fastest pace for four and half years, amid reports of redundancies and fewer job opportunities.
According to the Report on Jobs survey from KPMG and the Recruitment and Employment Confederation (REC) for May 2025, UK recruitment activity recorded a further reduction.
Permanent placements fell at a slightly sharper rate, but the decline in temporary billings was the slowest in six months. Meanwhile, overall demand for staff fell at a notably softer rate.
Candidate availability
Vacancies down 17% as labour market weakens
The report, compiled by S&P Global, analyses responses to questionnaires sent to a panel of around 400 UK recruitment and employment consultancies.
Candidate availability continued to rise in May 2025, with the rate of growth the steepest since December 2020. Recruiters signalled quicker increases in the supply of both permanent and temporary staff, with the former recording the sharper rate of expansion.
Respondents frequently reported that redundancies and fewer job opportunities had pushed up candidate availability in May 2025.
Jon Holt, group chief executive and UK senior partner at KPMG, said May’s data showed very little change from the previous month.
“Employers are still holding back on hiring, which meant last month the number of jobseekers increased at the steepest rate since 2020. The first half of this year has been full of uncertainty for businesses who are still trying to navigate cost pressures, technology advancements and global risks.
”Business leaders will want to see how the new trading agreements with the US and EU, government spending plans and the Modern Industrial Strategy will drive forward our economic growth. To boost the jobs market, employers need to feel confident about the outlook and understand how AI will impact their business.”
The downturn in demand for staff eased notably in the latest survey period, with total vacancies declining at the weakest rate since September 2024. Softer reductions were signalled for both permanent and temporary vacancies, though in each case the rate of contraction was solid.
With the Industrial Strategy imminent, businesses are looking for more than talk of renewal; they want a clear plan for an economic revival” – Neil Carberry, REC
Salaries for permanent new employees increased further in May, with recruiters often noting that competition for suitably-skilled candidates had driven the latest upturn. The rate of salary inflation was the quickest seen since last August. At the same time, temp wage growth improved to a one-year high.
Neil Carberry, REC chief executive, said: “More encouraging signs in temp billings, vacancies, and stabilising private sector demand offer a measure of optimism as we head into the second half of the year. There are early signs of promise, particularly in the Midlands, which saw its first increase in permanent placements in a year and a rise in billings after four months. Meanwhile, the downturn in temporary billings has eased further in London and the North of England.
“The big test now is whether the Spending Review convinces more employers to dance at the party by turning intent on hiring and investing into action. The Spending Review delivered a big hit in terms of eye-catching spending on technology and energy, but the lack of announcements on workforce matters is badly out of step with its desire to build a deep pool of talent.”
Regional differences
The sharpest reduction in permanent placements was seen in the South of England. The Midlands meanwhile, bucked the UK trend and recorded the first increase – albeit marginal – in placements for a year.
Seven of the ten monitored job categories registered lower demand for permanent staff in May. Hotel and Catering saw the sharpest reduction in vacancies, followed by the Nursing/Medical/Care and Retail sectors. The strongest uptick in demand was seen in Engineering.
Carberry added: “With the Industrial Strategy imminent, businesses are looking for more than talk of renewal; they want a clear plan for an economic revival. One that acknowledges the central role of good workforce policy – beyond just employment rights. That means putting workforce matters at the heart of the agenda, not treating it as a compliance issue.”
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