UK Hiring Softens and Pay Growth Eases in February, KPMG and REC Report

Permanent staff appointments fell at their weakest rate in nearly three years last month, with hiring moving closer to stabilisation as pay growth retreated from a recent peak, according to the March 2026 KPMG and REC, UK Report on Jobs, compiled by S&P Global from data collected between 10 and 23 February.

The headline finding carried a notable reversal on pay. Starting salary inflation, which had hit a 17-month high in January, slowed in February to its softest pace since last October and to a level described as well below the survey's long-run average. Temporary wage inflation also weakened from the start of the year, with pay rising only modestly overall. The report attributed the pullback to a dual dynamic: competition for sought-after skills continued to exert upward pressure on pay, yet some recruiters reported that improved candidate supply had limited wage increases.

Temporary billings declined modestly in February, reversing the marginal rise recorded in January, which had itself been only the second increase in temp billings since May 2024. The shift illustrates how quickly the early-year pickup faded under the weight of subdued demand.

On vacancies, the picture improved at the margin. The number of job opportunities across the UK continued to decrease in February, but the rate of contraction was the slowest recorded since last May. A weaker drop in permanent vacancies drove that improvement, partially offset by a slightly quicker reduction in demand for temporary staff. The report also noted a relative improvement in employers' willingness to recruit new staff.

Candidate availability accelerated. February data signalled a rapid rise in overall candidate numbers across the UK, with the rate of expansion picking up from January's one-year low. A stronger rise in the supply of permanent workers more than offset a softer expansion in temporary candidate availability. Even so, the February pace remained slower than the average recorded across 2025, a year in which candidate supply reached its fastest rate of expansion since late 2020 according to the August 2025 release of the same report series.

The January survey, which drew on data collected between 12 and 26 January, had offered a more upbeat snapshot. Recruiters reported that some companies pressed ahead with recruitment plans as a degree of market uncertainty lifted following the government Budget announcement. Starting salaries in January increased at the quickest pace for nearly a year and a half, and temp wage inflation hit the joint-highest reading since May 2024. The February data suggests those conditions did not hold.

Wider official figures add context to the easing trend. ONS data showed average weekly earnings, including bonuses, rose 4.6 percent on an annual basis in the three months to June, marking the fourth successive period of slowing pay growth and the softest rise since the three months to September 2024. Private sector earnings grew 4.7 percent, the weakest rate since the three months to March 2021, while public sector pay growth held steady at 5.3 percent.

The KPMG and REC, UK Report on Jobs is compiled by S&P Global from responses to questionnaires sent to a panel of around 400 UK recruitment and employment consultancies. The Permanent Placements Index and Temporary Billings Index both use a baseline of 50.0 to indicate no change from the previous month. Specific February index readings were not available in the extracts provided ahead of the full release.