UK labor market shows rising permanent hiring amid services sector job cuts

The UK labor market showed mixed signals in August. According to a report by KPMG and the Recruitment and Employment Confederation (REC), permanent staff appointments increased for the first time since September 2022. The Permanent Placements Index rose to 50.5 from 50.0 in July, driven by companies expanding capacity and winning new contracts. However, overall staff demand continues to fall, and employers remain cautious due to economic and policy uncertainty.

In contrast, the services sector has experienced 23 consecutive months of job cuts as of August, according to S&P Global’s Purchasing Managers Index (PMI). While the services sector continues to expand with a headline reading of 52.5, rising operational costs—including fuel, transportation, and wages—have led firms to trim headcounts or freeze hiring. Additionally, export sales for UK services declined for a sixth consecutive month, reflecting weak international demand.

While temporary recruitment remains strong, with the Temporary Billings Index rising to 52.4, the broader employment landscape remains characterized by a tension between modest activity growth and persistent cost pressures.