- Latest pulse check of London jobs market shows hiring activity for permanent roles across the city at its lowest point since the start of the year and trailing equivalent UK-wide reading
- Vacancies for temporary and permanent roles also down in May
- Latest figures follow April’s hike to employer national insurance contributions
Permanent job placements in London fell sharply in May as the impact of April’s increase in employer national insurance contributions and an uncertain global trading environment hit hiring.
That’s according to new data published today by KPMG and the Recruitment and Employment Confederation (REC), supported by BusinessLDN.
The London labour market pulse check, compiled by S&P Global and incorporating responses from recruitment consultancies across the capital, shows the reading for permanent placements in the city stood at 43.7 in May – any figure above 50.0 indicates expansion whilst any figure below suggests contraction.
It marks the lowest reading for permanent hires across London since January (42.9), with activity in the capital lower than the UK as a whole (44.2). Meanwhile, the reading for temporary billings in London (49.6) has been in negative territory for 17 months.
As hiring slowed, permanent staff availability (60.6) and temporary staff availability (63.0) have both increased.
Despite the labour market continuing to cool and staff availability increasing, pay growth for new starters ticked up in May for permanent roles to 56.9 and rates for temporary placements also increased (52.8). This may have been driven by robust demand for specialist roles in fast-growing sectors.
Neil Carberry, Chief Executive at the Recruitment & Employment Confederation, said: “Businesses remain cautious, despite stronger long-term intentions they are concerned by the volatility of the immediate outlook, especially as employment costs rise. As employers adjust to this Spring’s tax rises, that could change. This is exactly why clear, supportive sounds and signals from government and local authorities are so important to unlocking confidence. London often feels economic headwinds affecting hiring earlier than other regions, given its exposure to global sectors such as finance, tech, and consultancy, but it is also the place that responds fastest when growth is on the horizon.”
Muniya Barua, Deputy Chief Executive at BusinessLDN, said: “Rising employment costs and global uncertainty have seen firms hit the brakes on hiring. The government should reassure business that it won’t bear the brunt of any future tax rises. Accelerating delivery of shovel-ready projects such as the DLR extension to Thamesmead would also go some way towards tackling London’s housing crisis and boosting growth.”
Separate data for the capital from REC’s Jobs Outlook, encompassing responses from more than 1,000 London-based recruitment consultants over the final quarter of last year and first quarter of 2025, shows the majority (62%) expected permanent placements to remain stable, whilst 18% expected to see an increase and 14% a decrease (6% don’t know).
For temporary agency workers, the outlook was more mixed. Around half (53%) of recruiters expected hiring to remain the same, a fifth (20%) expected an increase and a similar proportion (23%) expected a decrease (4% don’t know).
Across sectors, technology expected to record the strongest hiring growth for permanent roles at the time of the survey, with one in five (21%) expecting to see an increase in placements in the sector, followed by engineering & technical (15%), health & social care (14%), drivers, including logistics (11%) and construction (7%).