May 2025 UK Labour Market Report: Hiring Cools but Engineering Demand Defies Downturn

Stay informed with the latest insights into the UK employment landscape from the KPMG and REC ‘UK Report on Jobs’, featuring analysis from leading recruitment consultancies, including Redline Group. This authoritative monthly report offers an in-depth analysis of labour market trends influencing hiring decisions across the UK.

As of April 2025, the hiring landscape remains characterised by caution. Economic headwinds—both domestic and global—continue to weigh on business sentiment, keeping recruitment activity subdued despite isolated sectoral resilience.

Key Highlights from the May 2025 Report

The overall UK labour market in April 2025 continues to show signs of weakness.

• Vacancy Levels: Engineering was the only monitored sector to see an improvement in demand. This bucks the trend of broad-based contraction seen elsewhere, with overall demand for staff dropping for the 18th consecutive month.
• Candidate availability rises: Overall availability of staff (both permanent and temporary) increased at one of the fastest rates since 2020, driven by redundancies and job insecurity.
• Pay trends reflects mixed pressures: Permanent salaries rose for the 50th month, with Contract/Temporary seeing the sharpest increase in nearly a year.

Expert Commentary on the UK Hiring Climate:

Jon Holt, Group Chief Executive and UK Senior Partner at KPMG, commented on the market dynamics:

“A softening in the pace of the hiring slowdown failed to bring any significant green shoots for the jobs market in April, as recruitment continued to be muted and the number of people looking for jobs increased. This is unsurprising, with businesses facing several pressures due to current global economic uncertainty and rising costs, it is unlikely to lead to a sudden turnaround in the market in the near term.

“Starting salaries increased again in April, as a new national minimum wage took effect, but the fact that the pace of growth continues to remain below the long-run average will support the Bank’s decision to decrease interest rates this month. While the inflation outlook has shown some improvement, businesses will be looking for more signs of market stability before committing to any major spending.”

Neil Carberry, REC Chief Executive, added further context:

“Given the bow wave of costs firms faced in April, maintaining the gradual improvement in numbers we have seen over the past few months is on the good end of our expectations. While we are yet to see real momentum build, hopes of an improving picture in the second half of the year should be buoyed by today’s data.

"Last week’s interest rate move is well-timed, offering some relief for businesses, with pay pressures now more contained.

“The biggest single drag factor on activity right now is uncertainty. Some of that can’t be helped, but payroll tax costs and regulation design is in the Government’s gift. Businesses have welcomed positive discussions with Ministers on the Employment Rights Bill, but now it is time for real changes to address employers’ fears and boost hiring. A sensible timetable and practical changes that reduce the red tape for firms in complying with the Bill will go a long way to calming nerves about taking a chance on someone.”

Latest UK Labour Market Statistics – April 2025

• Job Vacancies: According to the ONS, 781,000 roles were reported in the three months to March—down 26,000 from the previous quarter and 5% below pre-pandemic levels.
• Wage growth: Average weekly earnings rose by 5.6% (ONS, Feb 2025), continuing the elevated trend of the post-pandemic period.
• CPI Inflation): Stood at 2.6% in March 2025. Slower wage growth and moderating CPI reinforce expectations of lower interest rates in the short term.

Skills in High Demand: Focus on Engineering and Technology

Across the engineering and technology sectors, permanent and contract skill shortages remain acute, particularly in: