Data from the latest KPMG and REC, UK Report on Jobs: North of England survey signalled a sharper decline in recruitment activity across the region. However, the downturns in both permanent placements and temp billings were less pronounced than those seen on average across the UK as a whole.
The steeper fall in hiring activity across the North of England coincided with a sharper decline in job vacancies, and drove a further marked increase in candidate availability. Nevertheless, pay trends for both permanent and temporary staff improved, as there was still competition for suitably-skilled staff.
The KPMG and REC, UK Report on Jobs: North of England is compiled by S&P Global from responses to questionnaires sent to around 150 recruitment and employment consultancies in the North of England.
Permanent staff appointments contract at substantial rate in July
July survey data signalled a further drop in permanent placements across the North of England, thereby stretching the current period of decline to just over two years. Anecdotal evidence indicated that the latest reduction was due to lower demand for permanent staff and recruitment budget constraints.
The rate of decline was rapid and the fastest in four months, although it remained noticeably softer compared to those seen earlier in the year. Of the four monitored English regions, only the Midlands posted a slower fall in placements than that seen in the North of England.
Recruitment consultancies in the North of England registered a ninth consecutive monthly decrease in billings for temp staff in July. Panellists often mentioned that the fall was reflective of tighter client budgets.
Notably, the rate of reduction was the strongest seen since April and steep overall. The decline was also a marked contrast with the series long-run trend of strong growth. The North of England recorded a softer decrease in temp billings compared to the UK average, however.
July data signalled a ninth consecutive monthly decrease in demand for permanent and temp staff in the North of England. Although solid and the strongest in three months, the reduction in permanent vacancies was not as sharp as the UK average.
In fact, the North of England recorded the softest drop in permanent job openings of the four monitored English areas. The downturn in temp vacancies was the strongest since March and sharp, and broadly in line with the UK trend.
Permanent labour supply rises at strongest rate in four months
As has been the case since the start of 2024, permanent staff availability in the North of England rose in July. The rate at which staff supply expanded was the quickest in four months and substantial overall.
Redundancies were cited as a key driver of growth, with panellists also linking the rise in supply to a mismatch of skills and available roles. The North of England also posted the quickest uplift in permanent candidate numbers of all four monitored English regions.
The number of candidates seeking temporary positions in the North of England rose further at the start of the third quarter. The rate of growth was not only substantial, but the joint-sharpest in over four-and-a-half years (on a par with March 2025).
According to recruiters, the pool of available temp workers had increased due to fewer contract opportunities. The North of England recorded the fastest increase in temporary labour supply of all four monitored English regions.
Starting salary inflation picks up in July
The seasonally adjusted Permanent Salaries Index posted above the crucial 50.0 mark again in July, to signal a fourth consecutive monthly rise in starting salaries across the North of England.
Panellists mentioned that pay had increased to attract and secure sought-after skills. Although still subdued compared to the long-run average, the rate of inflation picked up to a solid rate that outpaced those seen across the three other monitored England regions.
After falling modestly in June, temp pay in the North of England increased in July. Although the rate of wage growth was below trend and only modest overall, it was stronger than the UK-wide average. According to anecdotal evidence, average hourly rates of pay for temporary staff were raised as a result of increased competition for suitably-skilled workers.
Commenting on the latest survey results, Phil Murden, Leeds office senior partner at KPMG UK, said: “Pressure on the North’s jobs market remains but July’s data shows that employers are continuing to adapt. While hiring slows, pay for permanent roles is rising faster here than anywhere else in England. Demand for specialist skills persists and businesses are working harder to hold on to the talent they already have.
“With hiring budgets under strain, we’re seeing a clear shift: firms are focusing less on expansion and more on retention, especially for experienced and hard-to-replace professionals.”
Kate Shoesmith, REC deputy chief executive, said: “There is a path to jobs market recovery – but it will take co-ordinated action from Government, the Bank of England and business to maximise on any potential upswing.
“With starting salaries and temp pay rising in the North of England but only modestly, it was right to cut interest rates last week. More action like this, to stabilise the business cost-base, is what will support growth and boost the jobs market this year. That is what the Chancellor should be keeping firmly in mind when preparing this year’s Autumn Budget.
“Regular fluctuations in permanent and temporary job placements in the North of England signal a local labour market that remains resilient but uneven. Across the UK, construction, a key economic bellwether, has seen a rise in temp vacancies, an early sign of confidence returning. Demand for blue-collar temp roles and permanent engineering jobs also remains steady across the country, offering another glimmer of optimism.
“At the same time, hiring in retail and hospitality are down in the UK. Employers in these sectors are pausing due to cost pressures and uncertainty around employment law, although when the turn comes, these industries typically rebound quickly.
“Meanwhile, wide ranging skills shortages for permanent staff remain in the North of England, which indicates the need for urgent support from government to upskill and retrain people; while businesses need to act now to secure the talent they will require when hiring picks up later this year, as our separate employer sentiment surveys suggest it will.”
