Recruiters’ Bulletin Sept 26

Recruiters’ Bulletin (September 26)

Headline: A tentative recovery in UK hiring, stronger demand for specialist skills and continued divergence across European recruitment markets

Recruitment in the UK

Market backdrop

The UK recruitment market is showing its first meaningful signs of improvement after a prolonged period of subdued hiring. The latest KPMG/REC Report on Jobs indicates that permanent placements increased in August for the first time since September 2022, while temporary recruitment continued to strengthen.

However, this should be viewed as a tentative recovery rather than a return to strong growth. Overall vacancies are still declining, candidate availability is increasing, and employers remain cautious about costs, economic uncertainty and longer-term headcount commitments.

Permanent market

First increase in permanent placements for almost four years: The latest KPMG/REC Report on Jobs recorded a permanent placements index of 50.5 in August, moving just above the 50.0 no-change level for the first time since September 2022. The improvement was marginal, but represents an important change in direction.
Vacancies remain under pressure: ONS data shows 707,000 UK vacancies for May to July 2026, down 6,000 on the previous quarter and 19,000, or 2.7%, below the same period a year earlier. Vacancies remain 10.3% below their pre-pandemic level.
Candidate supply continues to rise: Recruiters reported another marked increase in candidate availability during August. Redundancies, fewer job opportunities and concerns over job security are contributing to a larger pool of candidates.
Pay remains a differentiator: Starting salaries for permanent appointments increased at the fastest rate since January, with competition continuing for highly skilled and niche candidates. The message for recruiters is increasingly clear: greater candidate supply does not mean that the best candidates have become inexpensive.

Temporary / contract market

Temporary recruitment remains comparatively strong: Temporary billings increased for the fifth consecutive month in August, with an index of 52.4 – the second-strongest rate of growth since April 2023.
Employers continue to use temporary and contract recruitment as a way of adding capacity while maintaining flexibility around permanent headcount. This is particularly relevant to project work, specialist skills, IT, engineering and professional services.

Opportunity for recruitment firms: The strengthening of the temporary market provides an opportunity for firms that have historically concentrated on permanent recruitment to consider whether contract, interim, or project-based solutions could provide an additional, more resilient revenue stream.

Sector & recruiter observations

Engineering and financial recruitment are showing resilience: Permanent vacancies increased across the Engineering and Accounting/Financial sectors in August, according to the KPMG/REC survey.
Retail and hospitality remain challenging: Retail and Hotel & Catering continued to record some of the sharpest falls in permanent recruitment demand. Temporary demand was also weak in these sectors.
Technology remains structurally important: Although overall technology recruitment remains below previous peaks, AI-related skills continue to reshape demand. Indeed reports that 9.4% of UK job postings now mention AI, up substantially over the past year. AI requirements are also spreading beyond traditional technology roles into mainstream commercial and professional occupations.
Skills rather than job titles: The market is increasingly rewarding recruiters who understand the skills behind a role rather than simply searching by job title. AI, data, digital transformation, engineering, compliance and specialist commercial skills continue to command attention even when broader hiring remains subdued.

Regional & junior markets

Regional recruitment remains mixed. The latest KPMG/REC data showed permanent placements increasing in London and the Midlands, while placements declined in the South and North of England.
The junior market remains particularly difficult. Employers have greater choice of candidates for many entry-level positions, while graduate and junior vacancies remain well below historic levels.
For recruiters, this reinforces the importance of understanding where genuine skills shortages exist rather than assuming that increased candidate supply applies equally across all sectors, locations and levels.

Recruitment in the EU

Labour market context

European recruitment markets remain broadly stable, but there is significant variation between countries and sectors.

The latest Eurostat figures put the EU job vacancy rate at 2.1%, with the euro area at 2.3%. The figures indicate a gradual normalisation from the very tight labour markets experienced in the immediate post-pandemic period, but significant shortages remain in particular occupations and countries.
For recruitment firms operating across Europe, the headline EU figure therefore needs to be treated with caution. Local market knowledge is increasingly important.

Key EU labour indicators

Vacancy rates vary considerably: The Netherlands recorded the highest EU vacancy rate at 4.0%, followed by Belgium at 3.4%, Malta at 3.3% and Austria at 3.1%.
At the other end of the scale, vacancy rates were 0.6% in Romania, 0.8% in Poland and 0.9% in Bulgaria, Spain and Slovakia.
This creates very different recruitment environments for agencies working across multiple European markets.
Services continue to lead: Within the EU, services recorded a vacancy rate of 2.3%, compared with 1.8% for industry and construction.
The strongest sector vacancy rates included administrative and support services at 3.1%, accommodation and food services at 3.0%, construction at 2.8%, telecommunications/computer programming and related information services at 2.6%, and professional, scientific and technical activities at 2.4%.

Permanent market trends

Specialist skills remain in demand: Despite the moderation in overall vacancy rates, demand remains strongest where employers require scarce technical, digital, engineering, professional or multilingual skills.
Technology and digital transformation remain important recruitment markets, while construction continues to experience relatively high vacancy rates across Europe.
Geographic specialisation matters: Recruitment firms should avoid treating “Europe” as a single labour market. The difference between a 4.0% vacancy rate in the Netherlands and 0.8% in Poland demonstrates the importance of country-specific sourcing strategies, salary benchmarking and candidate mapping.

Temporary / contract market

Temporary and project-based recruitment continues to have an important role in European markets where employers need flexibility around uncertain economic conditions, project cycles and specialist skills.
For recruitment firms, contract recruitment can also provide a useful route into new European markets. Building relationships around project staffing, interim management and specialist temporary skills can create opportunities where permanent headcount budgets remain constrained.

Recruiter positioning & EU nuances

Cross-border recruitment remains complex: Recruiters working internationally can add significant value by helping clients understand local employment practices, salary expectations, labour availability and candidate mobility.
Talent shortages and candidate availability can coexist: Some European markets have relatively high unemployment or low vacancy rates while simultaneously experiencing shortages in specific occupations. This makes accurate market mapping increasingly important.
Multilingual capability remains valuable: Recruiters able to source candidates across borders and operate confidently in local languages have an advantage, particularly for sales, technical, engineering, digital and customer-facing roles.

Practical takeaways for Recruiters

Prepare for a gradual recovery — the UK permanent market has finally moved into positive territory, but the improvement is marginal and should not be mistaken for a boom.
Continue developing temporary and contract capability — the temporary market is currently providing stronger momentum than permanent recruitment and can provide valuable recurring revenue.
Specialise rather than generalise — sectors such as engineering, technology, financial services, digital transformation and specialist sales continue to provide opportunities despite weaker overall hiring.
Sell market intelligence, not just candidates — clients increasingly need advice on availability, salary levels, geography, skills and realistic hiring timescales.
Focus on skills rather than job titles — AI, automation, digital, data, engineering and specialist technical capabilities are changing what employers require from candidates.
Use candidate supply intelligently — greater availability creates an opportunity to strengthen talent pools, build future pipelines and improve candidate selection, rather than simply competing on price.
Look beyond the UK — significant differences between European labour markets create opportunities for specialist firms with genuine international capability.
Protect margins — the recruitment market is improving, but profitability remains under pressure. Recruitment firms should focus on assignment quality, fee levels, conversion, contractor margins, and consultant productivity rather than simply chasing volume.

Sources and Further Reading:

KPMG / REC UK Report on Jobs — monthly indicators covering permanent placements, temporary billings, vacancies, candidate availability and starting salaries.
Office for National Statistics (ONS) — UK vacancies, employment and labour market statistics.
Indeed Hiring Lab — UK and European job-posting, wage and labour-market trends, including the growth of AI-related recruitment.
Eurostat — European vacancy rates, employment and labour-market indicator

Advisory Support

If you are in recruitment and considering how to move your business forward, we work with SME recruitment entrepreneurs and in-house talent specialists to help develop their services and operations, whether you are a solo start-up, micro-recruiter or established recruitment brand.
If you are a start-up, stand-alone recruiter, SME, or established recruitment business, or an in-house talent specialist or HR leader, please contact us to learn more about our advisory and recruitment business mentor support.
Please note that the information contained herein is an aggregate of news stories, official statistical sources and commentary from commentators and organisations widely available. Readers should seek independent verification. This bulletin does not represent the views or opinions of Standley Business Services.
We will continue to monitor the latest recruitment news and provide monthly summaries of the key trends.

Standley Associates
UK: 0044 (0) 845 519 6304
Email me here - click this link