A Look at the UK Job Market: October 2026
The UK job market is still tight, but for the first time in a long while some of the signals are pointing the right way. Recruiters placed more people in permanent jobs in September than in August, and vacancies are falling at their slowest rate in two years. At the same time, big employers are still cutting roles and pay growth is cooling. Here is what the latest data says, sector by sector, and what it means if you are looking for work right now.
Last updated: 9 October 2026. Next update: 20 October 2026, when the ONS publishes new labour market figures.
What do the latest UK job market figures show?
| Measure | Latest figure | Source |
|---|---|---|
| Unemployment rate | 4.9% (May to July 2026), up 0.2 points on the year | ONS, 15 September 2026 |
| Vacancies | Around 702,000 (June to August 2026), down 8,000 on the quarter | ONS, 15 September 2026 |
| Unemployed people per vacancy | 2.5 | ONS, 15 September 2026 |
| Payrolled employees | Down 101,000 over the year to July 2026 | ONS, 15 September 2026 |
| Regular pay growth | 3.5% (0.6% after inflation, CPIH) | ONS, 15 September 2026 |
| Permanent placements index | 50.9 (above 50 means growth) | KPMG and REC, 8 October 2026 |
| Demand for staff index | 48.5, up from 47.0 (still falling, but more slowly) | KPMG and REC, 8 October 2026 |
| Permanent salaries index | 53.4, down from 54.1 (still rising, but more slowly) | KPMG and REC, 8 October 2026 |
In short: there are around 702,000 vacancies, the lowest level outside the pandemic since 2014, and unemployment stands at 4.9% (ONS). Permanent hiring through recruitment agencies has grown for two months in a row (KPMG and REC). The ONS figures are the latest official numbers until the next release on 20 October, when this page will be updated.
Is hiring actually picking up?
Cautiously, yes. The KPMG and REC Report on Jobs surveys around 400 UK recruitment agencies each month, which makes it one of the earliest signals of where hiring is heading. In September:
- Permanent placements rose for a second month running, at the fastest pace in four years, although the rise was still described as marginal.
- Vacancies fell again, but at the weakest rate since August 2024.
- Private-sector demand for permanent staff improved for the first time in over two years.
Jon Holt, chief executive of KPMG UK, said: "For the second month in a row we are seeing the jobs market starting to flicker back to life" (KPMG and REC).
The catch is competition. The number of candidates available for work is still rising sharply, even if the increase is the slowest in three years. More people are chasing a slowly growing pool of roles, which is why job hunting can still feel harder than the headlines suggest.
Which sectors are hiring and which are cutting?
Where hiring is picking up
- IT and computing, and engineering. These two sectors led demand for permanent staff in September (KPMG and REC).
- Care, nursing and medical, and blue-collar work. These were among the only areas where demand for temporary staff grew (KPMG and REC).
- Seasonal retail and delivery. Royal Mail, Sainsbury's and Argos, M&S, John Lewis Partnership and Boots are between them recruiting more than 60,000 seasonal workers. We list who is hiring and how to apply in Christmas jobs 2026.
For the full sector picture, see who's hiring in the UK right now.
Where it is under pressure
- Retail and hospitality. Hotel and catering and retail saw the sharpest falls in vacancies in September (KPMG and REC).
- Construction. Construction firms cut jobs at the fastest rate in five months, and activity is still shrinking (S&P Global UK Construction PMI, 6 October 2026).
- Financial services. HSBC is reported to be planning deep cuts in its UK wealth management arm, including up to around 70% of financial advisers, as part of a push to use AI (Financial Times, via ITV News, 7 October 2026). HSBC has not confirmed the figures and said it is "continuing to evolve to deliver more digitally-enabled products and journeys".
- Head office and support roles. Royal Mail plans to cut up to 2,500 head office and support jobs by the end of 2027, with frontline roles not affected (ITV News, 7 October 2026).
- Services more broadly. Service-sector firms have now cut jobs for two years in a row, though September's fall was the slowest since October 2025. Some firms said they were not replacing staff who left, citing payroll costs and the use of new technology including AI (S&P Global UK Services PMI, 5 October 2026). We look at how much of this is really down to AI in is AI really behind UK job cuts?
A sector being under pressure does not always mean every role in it is crowded. One recruiter's data on 1,141 adverts found legal roles had a median of just 11 applications, against 31 across all adverts (TalentFinder). We dig into this in the UK jobs where hardly anyone is applying.
What is happening to pay?
Pay is still rising faster than prices, but the pace is slowing.
- Regular pay grew 3.5% in May to July 2026, or 0.6% after inflation (ONS).
- Starting salaries for permanent roles are still rising, but growth slowed in September for the first time in four months and remains below its long-run average (KPMG and REC).
If you are negotiating an offer, there is still room to ask, but less than there was earlier in the year. We track pay every month in are UK salaries still rising?, and our guide to answering salary expectation questions walks through how to pitch a number.
What does this mean if you're looking for work?
- Aim where demand is. If your skills transfer into IT, engineering, care or another sector that is still hiring, that is where your applications go furthest. Our guide to highlighting transferable skills shows how to make the switch on paper.
- Fewer, better applications still win. With candidate numbers high, a tailored application beats volume. See how many jobs you should apply for.
- If your sector is cutting, act early. If your employer has announced cuts, start updating your CV now rather than waiting for the outcome. Our first 30 days after redundancy guide covers the practical steps.
If you are a graduate, the picture is tougher still. Our graduate job market update covers entry-level vacancies in detail.
Career Intelligence turns these numbers into a view of your own options: where demand for your role is growing, what it pays and how two routes compare. Get started today at mypathfinder.uk
This page is updated monthly as new data is released. Last updated: 9 October 2026.