September 2026

Executive summary

Demand for staff is still falling. The KPMG and REC Report on Jobs published on 7 September, covering August, shows total demand for staff falling for the 34th month in a row and permanent vacancies falling at the same pace as in July. These are the two measures we said would have to rise before we would say the market is recovering. Permanent placements rose for the first time since September 2022, which the report links partly to returning business confidence. We think it mainly reflects more candidates rather than more jobs: the number of people looking for work rose at its sharpest rate in three months, with recruiters citing redundancies, fewer job opportunities and concerns about job security, and more candidates for fewer roles makes each vacancy easier to fill.

For people trying to get into work, the position got worse. Vacancies fell to 702,000, down 4.9% on the year against 2.7% last month. Vacancies at businesses with one to nine employees are down 23.5% on the year, against 16.1% last month. Youth unemployment is 16.4%, or 751,000 people, 109,000 more than a year ago. The Commons Library describe this as the highest level since 2014. The small fall we reported in August has not continued.

The headline figures barely moved. Employment is 75.1%, unemployment 4.9% and inactivity 20.9%. The survey and tax records still disagree about whether the number of employees is rising or falling, and ONS continue to say the tax records are the more reliable measure. Those records show 145,000 fewer payrolled employees in August than a year earlier, on an early estimate that is likely to be revised.

Overall real pay is barely growing, and private sector pay has already fallen in real terms. Regular pay grew 0.6% after inflation over May to July, measured against CPIH, the ONS inflation measure that includes housing costs. The gap between the public and private sectors remains wide: public sector pay grew 6.3%, helped by the timing of NHS pay awards, and private sector pay grew 2.9% before inflation. The Resolution Foundation calculate that private sector weekly earnings are £2 lower in real terms than last October. Consumer price inflation (CPI) rose to 3.1% in August. The Bank of England expects inflation of around 3¾% in the final quarter of the year and slightly above 4% early next year, and three of its nine policymakers voted to raise rates. The Resolution Foundation expect private sector wages to shrink significantly in the second half of the year as inflation rises.

The people joining Stay Nimble this month reflect both sides of the market. Many have been made redundant after a long time with one employer and have not looked for work in years. Others are experienced and reach final interviews but do not get the offer, and recent graduates describe hundreds of applications producing a handful of interviews.