UK Hiring Fell in October While Starting Pay Rose: What the Pay-Hiring Split Signals

Data as of November 9, 2026.

British recruitment activity contracted in October, with permanent staff placements falling for the first time in four months and at a solid pace, according to the KPMG and Recruitment and Employment Confederation Report on Jobs compiled by S&P Global from a panel of around 400 recruitment consultancies. Temporary billings declined for the first time in seven months, ending a growth streak.

The same survey found pay moving the other way. Recruitment consultancies reported stronger increases in starting salaries for permanent staff and rising average pay for temporary workers, with panellists attributing the upturn to competition for candidates who remained in short supply. Pay growth across both staffing types stayed below the survey's long-run averages even as it strengthened.

That combination, fewer placements alongside faster pay, is the part of the release that carries information. Two numbers moving in opposite directions describe a market that is not clearing, and the reason it is not clearing is specific.

The split is about who is hiring, not how much

Demand and supply are both present and failing to meet. Overall demand for workers fell only slightly, and the reduction was the weakest in 26 months. Permanent vacancies declined at the slowest rate in over two years, and temporary opportunities rose fractionally at the start of the fourth quarter, halting two months of contraction.

Private sector demand was positive on both counts, with permanent and temporary roles increasing at modest and marginal rates. Public sector vacancies kept falling for both permanent and short-term staff, though more slowly than in September.

So employers are still posting, and candidates are still available, and placements are still falling. The survey's own explanation is that firms are delaying or scaling back decisions amid uncertainty and rising costs. The interim chief executive of the REC, Maxine Bligh, identified where the residual strength sits: London and the north of England both recorded growth in permanent placements, and permanent demand rose in IT, engineering, construction and accounting and finance. Retail and hotel and catering saw the steepest declines.

That geography and sector map describes a market discriminating by skill rather than a market shutting down. Firms competing for engineers and accountants pay more; firms exposed to consumer spending stop hiring. The pay and hiring numbers split because the population doing the paying is not the population that stopped.

Why the Bank of England is reading this differently than the hiring headline

The Bank of England raised Bank Rate by a quarter point to 4 percent on November 5, an 8-1 vote, and its November Monetary Policy Summary gave the reason in the same terms the survey now echoes. CPI inflation was 3.5 percent in September and is projected to reach around 5 percent by the middle of next year, driven by energy.

Against that, the pay signal matters more than the placement signal. Pay growth that stays below its historical trend while vacancies fall slowly describes a labour market cooling without breaking, which is what a committee contemplating further tightening wants to see but does not yet see clearly enough. The full transmission from Bank Rate to a household budget is traced in the price of money and in how Bank Rate reaches households.

Pay settlements are the slowest-moving component of services inflation, because they are contractually fixed for a year at a time. A single month of stronger starting salaries does not move the index; twelve months of them do. That is why the Committee's November language described the case as one for "modestly tighter" policy rather than for aggressive action, and why one survey month cannot settle the question.

The fiscal backdrop matters too. Bligh called the Budget a missed opportunity for jobs and growth, noting the Office for Budget Responsibility's conclusion that the Employment Rights Act is likely to weigh on economic activity, and arguing the government missed a chance to reduce risk by excluding recruitment agencies from its guaranteed hours proposals. The interaction between fiscal drag and labour supply is set out in The UK Tax System: and in Britain's Bond-Market Warning: How.

What a placement means for the person and the price level

For a jobseeker, the composition of demand is the actionable detail. Placement volumes falling while starting salaries rise is not a paradox from the candidate's side: it means fewer roles, concentrated in categories where the employer has to pay to fill them. The measured unemployment experience of a construction estimator and a retail supervisor in the same quarter can be entirely different.

For the inflation question, the relevant number is not the level of pay growth but whether it exceeds productivity growth. Starting salary increases below the survey's long-run average, in an economy with 3.5 percent inflation, imply real pay growth that is negative or close to it for new hires. That does not ease the Committee's problem, because services prices respond to total labour cost per unit of output, not to the wage of the marginal hire.

The comparison with the United States is instructive and separate. The October US employment report, released November 6, showed 165,000 jobs added with wage and mortgage implications traced in the 165,000 jobs report. American payroll growth and British placement volumes are not the same instrument: one counts people on payrolls, the other counts assignments filled by recruiters. The gap between them is the gap between a labour market measured at the employer and one measured at the intermediary, and the structural difference is set out in Why This Number Matters:.

A worked example: what a slower fill costs

Take a firm filling a permanent role at a £45,000 salary, decided in October, in a category where demand is holding up. In a market where vacancies fall at the slowest rate in over two years but placements still fall, the time to fill lengthens before the salary does.

Assume the role sat vacant for six weeks at the start of the year and now takes ten. Four extra weeks of a £45,000 post unfilled is £3,462 of output not produced, calculated as £45,000 divided by 52 weeks, multiplied by four. If the employer then pays 3 percent more to secure the candidate, that is £1,350 a year in additional salary cost, plus employer National Insurance at 15 percent above the secondary threshold, adding roughly £203 on the portion above it.

The two costs point in opposite directions on the inflation question. The vacancy cost is lost output, which is disinflationary in the sense that it reduces demand. The salary increase is a cost that enters the unit labour cost calculation. A firm facing both does not respond by hiring more; it responds by hiring fewer people at higher rates, which is exactly the pattern the survey describes.

The next two readings

The survey covers October, and the Bank of England has already acted on data through September and its own Agents' intelligence. The first test of whether October's pay strength was noise or a turn comes with the next Report on Jobs, covering November, published in early December.

The second test is the labour market data that sits beside the survey rather than inside it. Recruitment consultancies report placements and pay, not headcount. A month in which placements fall and starting pay rises is consistent with employers trading down to fewer, more senior hires, which would show up in total employment as flat rather than falling.

The pattern for pay policy is narrower than the headline. The market has not stopped paying for scarce skills, and it has stopped paying for volume. A higher cost per hire alongside a longer time to fill is the visible signature, and the sectors shedding demand, retail and hospitality, are where that combination arrives first.