Permanent hiring index hits 50 after 45 months of decline

The index of permanent staff placements in the REC-KPMG report on jobs reached 50 in July, the line that separates growth from contraction.

It had sat below that line every month since the autumn of 2022. That is the longest run of decline in the index's history, and on KPMG's account it covers 45 months.

The report was published on Monday by the Recruitment and Employment Confederation and KPMG.

London was the engine. Businesses there took on full-time staff at the fastest pace in nearly four years, the report said. Permanent placements kept falling in the north of England.

Vacancies remain scarce by the same measure. The vacancies index rose to 47.1, its highest since September 2024, but still below 50.

Part-time roles are where the movement is. Vacancies for part-time work grew at the fastest pace since August 2023, continuing a trend the June survey picked up, when part-time hiring hit a three-year high.

For a founder hiring one or two people, that is the practical shape of the market: candidates are available, full-time openings are not multiplying, and part-time briefs are competing hardest for the same people.

Salary expectations are the harder part. Pay growth for full-time staff reached a six-month high in July and has risen every month since March 2021, according to the survey.

That sits awkwardly against official data. Office for National Statistics figures have shown private sector pay growth slowing to a six-year low, and unemployment steady at 4.9 per cent over the last quarter.

The two readings point in opposite directions, so a candidate quoting the market and a founder quoting the market can both be right. Expect the argument, and know which number you are using.

The survey is watched closely as a gauge of the labour market partly because of concerns about the quality of official employment data.

The context for the freeze is cost. Employer national insurance contributions were raised by £25 billion in Rachel Reeves's 2024 budget, alongside minimum wage rises, while energy prices climbed after Russia's invasion of Ukraine in 2022 and the war in the Middle East pushed up oil prices.

Recent history was worse. In December the same survey showed permanent and temporary hiring both falling, with permanent placements at a four-month low.

The Bank of England will read the pay figures too. It has held interest rates at 3.75 per cent since December, with inflation at 2.6 per cent against a 2 per cent target, and sustained pay rises are the thing that keeps rates where they are.

So the signal for founders is narrow but real. Hiring has stopped getting harder rather than started getting easier, wage demands are still climbing on this measure, and anyone budgeting a first permanent hire outside London should not assume the London pace applies to them.