Q3 2026 UK Jobs Market Report

Executive Summary

We feel the REC’s pronouncement of a permanent jobs market “revving its engine” is a touch overblown.^[1] While that choice of metaphor calls to mind exciting mental collages of V8 engines, Vin Diesel and tyre-smoking acceleration, the underlying data more accurately evokes a gentle pootle around a car park.

While it’s true that permanent placements recorded a second consecutive month of growth, the caveats are worth emphasising: the growth is extremely marginal, and is against a backdrop of years of ongoing contraction. Likewise, permanent vacancies continue to decline – marking three years of continuous monthly falls. And although private sector permanent vacancies have now registered their first rise in two years, the overall trend is one of a slow, boneless slide since the post-covid recovery.^[1]

Total vacancy numbers are undeniably a source of concern – dipping below 700,000 for the first time since early 2021 – but at least employment figures are proving more resilient.^[2][3] The UK’s employment rate is now the third highest in the G7, and appears to be holding steady.^[4] Unemployment fell to 4.7% in the three months to August, which is somewhat notable given present headwinds.^[2]

So, what does this tell us?

The overall combination of falling vacancy numbers, rising candidate supply, and steady unemployment rate paints a picture of an ossified labour market.^[1][2] Businesses are hesitant to hire,^[1][2][5] employed candidates are hesitant to move,^[6] and the Government appears hesitant to do anything drastic in the upcoming budget.

But although this Mexican standoff of caution looks set to continue for a while longer, it may not take much to create a positive feedback loop. Household debt to GDP is lower than at any point since the early 2000s,^[7] corporate balance sheets are in a strong position,^[7][8] and the IMF recently upped the UK’s growth forecast.^[15] The key missing ingredient is sentiment. Should greater optimism take hold, it may be the start of a self-fulfilling growth story.

Until then, we’ll leave the revving to the REC.

Headline Findings

• Vacancies are at a 12-year low (excl. pandemic). UK job vacancies fell by 21,000 to 691,000 in the three months to September, their lowest level since 2014 outside the pandemic.^[2]
• Small businesses have stepped back. Firms employing one to nine people drove the decline, with vacancies down 21.1% over the quarter amid rising labour costs.^[2]
• The recovery is patchy. Permanent placements rose in three of the four English regions in September, led by the North, while the South was the only region to see a decline. Demand for permanent staff rose in half of the ten sectors monitored, led by IT and engineering.^[1] Among the sectors we cover, only manufacturing had vacancies back at their long-run norm over the summer.^[2]
• The public sector is pulling back. Demand for public-sector staff, both permanent and temporary, continued to fall at a marked rate in September.^[1] That shows in education, which had the lowest vacancy rate of any industry over the summer.^[2]
• The temp market is losing momentum. Temp billings grew throughout the quarter but slowed sharply in September, and demand for temp staff fell for a second month. Meanwhile, temp candidate numbers rose at their fastest pace in three months, which recruiters put down to fewer vacancies and more people out of work.^[1]

What This Means for Candidates

If you are looking for work, you won’t need a report to tell you it is hard going. When employers act cautiously with their hiring, a knock-on effect can be that fewer people move jobs (known as “job hugging”), which in turn means even fewer vacancies open up. This can become a vicious cycle that further makes things more challenging for those out of work.

We see this first-hand: some of our own adverts have attracted more than 1,000 applications.

At that scale, even extraordinarily good candidates are turned down for reasons that have little to do with their ability. Those starting out face the steepest climb, with more than a third of employers cutting entry-level roles.^[9] If your search is taking longer than you hoped, that reflects the market dynamics, and is absolutely not a verdict on your worth.

A few habits can tip the odds in your favour:

Reach out, and be human.

Alongside your applications, contact people in the roles or organisations that interest you. Explain your situation honestly, and ask how they got there or what they would advise. More people are willing to help than you might expect.

Make every application count.

Lead with outcomes rather than duties, tailor your CV to each role, and don’t rule yourself out for falling slightly short on experience. If you have skills recruiters report as scarce, such as data, cyber security, accountancy or AI, put them up front.^[1] Use AI to check a draft, not to write it.

Widen the net.

Demand is returning in pockets of the private sector, particularly in IT and engineering.^[1] Skills in finance, operations and IT often transfer from education and the wider public sector, and temporary or contract work can keep you current and lead to permanent roles.

Weigh offers pragmatically.

With starting pay rising more slowly and inflation expected to edge higher, we recommend looking beyond the headline salary to flexibility, training, progression and the timing/process of the pay reviews.^[1][10]

Finally, pace yourself. Set a routine you can sustain, keep a simple record of where you have applied, ask for feedback whenever you reach interview, and change your approach if something isn’t working. Time away from the screen is not time wasted.

Recoveries tend to show up as more interviews before they show up as more offers, and permanent placements have only just started to grow again.^[1] But markets like this can turn quickly once confidence returns, and for the first time in a long while there are early indications that the direction of travel is moving in your favour. Keep going.

What This Means for Clients

Caution is understandable, but it’s also creating opportunities for employers prepared to move before the crowd. Here are our three key takeaways:

The fall in small-firm hiring leaves the door open for others.

With the smallest employers holding fire, those still recruiting face less competition for talent than they have for some time.^[2] That is particularly true of the versatile, ‘sleeves-rolled-up’ people small firms tend to rely on. In our experience, roles there are less tightly defined, and staff often wear multiple hats.

Recruiters now report a surplus of candidates in operations, administration, project management and generalist IT and HR roles.^[1] For lean teams that need proactive people with initiative, now could be an excellent time to recruit.

The candidate surplus may be starting to turn.

Candidate supply is growing at its slowest pace in three years. In London, permanent vacancies have now risen for six months, while candidate supply has grown more slowly than in any other English region.^[1][11] Experienced people released by cuts at the large consultancies and in media are available now. But with unemployment edging down and payrolls stabilising, the Resolution Foundation sees tentative “green shoots”.^[2][12] Should confidence return, employers who waited for certainty may find themselves facing much stiffer competition for talent than those who moved first.

Temp-to-perm could be coming into its own.

From 1 January 2027, employees can claim unfair dismissal after six months rather than two years, with no cap on compensation.^[13] Getting the hire right first time will matter more than ever, and a temporary assignment lets both sides test the fit before a permanent contract begins.

It is also one of the best ways to give young people a foot in the door. Youth unemployment is 54,000 higher than a year ago, and around a million young people are not in education, employment or training.^[14] Employers who keep that door open now will be building the pipeline they need when the market turns.