British companies continued to slow their pace of hiring in May, marking the eighth straight month of declining staff demand, according to a recruiter survey released on Friday. However, there are indications that the downturn may be approaching a turning point.
The Recruitment and Employment Confederation (REC) reported another significant drop in permanent job placements, though the decrease in spending on temporary workers was the smallest seen in six months.
“There are some positive signals in the temp hiring data, vacancy trends, and a stabilizing private-sector demand—reasons to be cautiously optimistic as we enter the second half of the year,” said Neil Carberry, REC’s Chief Executive.
The UK labor market is being pressured by sluggish economic growth, increased employer national insurance contributions, and a nearly 7% increase in the minimum wage implemented in April.
Official tax figures revealed the largest monthly drop in payroll employment in five years, while the unemployment rate for the February-to-April period rose to 4.6%—its highest level in nearly four years.
REC also noted a surge in job seekers, with the fastest increase in candidate availability since December 2020. Recruiters attributed this trend to growing redundancies and fewer job openings.
The Bank of England, which is widely expected to hold interest rates steady in its upcoming decision, has said labor market conditions will play a crucial role in determining how quickly it can begin cutting rates.
Although regular private-sector wage growth eased to 5.1% in the three months to April—down from 5.5% in Q1 2025—it remains well above the level the BoE considers compatible with bringing inflation back to its 2% target.
REC added that starting salaries for permanent roles rose at their fastest pace since August 2024, while temporary pay saw its strongest annual increase in a year. Still, unlike official wage data, REC said its pay growth indicators remain below historical averages.
