The London labour market recorded a tentative shift in March, with new data showing the first rise in permanent hiring for a year, according to the latest KPMG and REC UK Report on Jobs.
The survey found that permanent staff appointments in the capital increased modestly, marking the first month of growth since last year.
Recruiters attributed the uptick to improved candidate availability and selective hiring in certain sectors.
However, the improvement in permanent recruitment was offset by continued weakness in the temporary jobs market.
Temporary billings fell for a fourth consecutive month, with the rate of decline accelerating to its sharpest in eight months.
London also recorded the steepest fall in temporary placements among all English regions, highlighting continued caution among employers relying on short-term staffing.
Anna Purchas, London Office Senior Partner at KPMG UK, said: “London’s jobs market is starting to find its feet again, with a return to growth in permanent hiring offering a welcome boost after a long period of slowdown. The impact of the current geopolitical situation means businesses are showing some caution – there’s a clear sense that employers are waiting to see how things unfold globally before making bigger hiring decisions.
“At the same time, with investment in areas like AI gathering pace, it’s important that people have the right skills to take advantage of these opportunities. Closing that gap and building confidence in digital and AI skills will be key to supporting long-term growth and keeping London competitive.”
Vacancy trends remained subdued. Demand for both permanent and temporary workers continued to fall, extending long-running downturns of 20 and 19 months respectively. While the pace of decline eased, overall hiring appetite remained weak by historical standards.
At the same time, the supply of candidates rose sharply. Redundancies were cited as the main driver of increased availability for both permanent and temporary roles, contributing to a marked rise in jobseekers across the capital.
Pay trends showed signs of cooling. Starting salaries for permanent roles increased only marginally, with growth slowing compared with previous months. Meanwhile, temporary wages fell for the first time in three months, marking the steepest decline in over five years.
Across the wider UK, regional differences were evident. Only the North of England recorded growth in both permanent and temporary hiring, while London led the decline in temporary billings.
Overall, the data points to a labour market that remains uneven: early signs of stabilisation in permanent hiring, but continued weakness in flexible and temporary employment, alongside growing pressure on wages.
Neil Carberry, REC Chief Executive, said: “The Gulf Conflict provided a headwind to hiring in March, but this did not stop the trend of stabilisation in the UK job market that has defined 2026 so far. The effects of a longer-run crisis are unclear, but the resilience of the job market last month was heartening. We had the first growth in permanent placements for a year in London – and this was the fastest increase in England.
“Business prospects for 2026 remain finely balanced, and confidence will be key. Households and businesses are still sitting on cash that might be put to work in the economy if the climate is right, boosting growth and particularly helping struggling consumer-facing sectors like retail and hospitality. The key way government can help is to tackle the root cause of the cost-of-living squeeze – the rising cost of doing business. Greater pragmatism on key policies, including the unworkable approach that has been taken on guaranteed hours, is needed now.”
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