UK Labour Market Insights - October 2026: UK Hiring Market Continues Recovering as Engineering Demand Strengthens

UK Labour Market Insights: Hiring Continues to Recover as Engineering and IT Strengthens

The latest Report on Jobs - October 2026 (October 2026, reflecting September data) suggests the UK labour market is beginning to stabilise after a prolonged period of uncertainty. For the second consecutive month, permanent hiring activity increased, while private sector demand for talent showed its first meaningful signs of growth in over two years.

Although overall vacancy numbers remain below previous levels, September's data points towards growing employer confidence, particularly across technology and engineering disciplines, where demand continues to outpace talent availability.

Commenting on the findings, Jon Holt, Group Chief Executive and UK Senior Partner at KPMG, said:

"For the second month in a row we are seeing the jobs market starting to flicker back to life, with businesses increasing their hiring across both permanent and temporary roles."

Permanent Hiring Records Strongest Growth in Four Years

Permanent placements increased for the second month running during September, with growth reaching its highest level since 2022. Recruiters reported greater hiring activity as organisations responded to improving business confidence, increased workloads and expansion plans.

Temporary recruitment also remained positive, although growth eased to its slowest pace in five months as some employers shifted focus towards permanent headcount investment. 

The findings suggest that businesses are becoming more willing to make longer-term hiring commitments after an extended period of caution.

Private Sector Demand Returns to Growth

One of the most encouraging findings from this month's report is the return of private sector hiring demand.

Permanent private sector vacancies increased for the first time in more than two years, whilst temporary private sector vacancies also recorded growth. Overall vacancy levels remain below historical norms, but September recorded the softest decline in job openings since August 2024, indicating that market conditions may be moving closer to equilibrium.

For employers planning strategic recruitment programmes, this improved confidence could signal the beginning of a more active hiring environment as we move towards 2027.

Engineering and Technology Lead Demand

For employers operating in high-technology sectors, there were particularly positive signs.

Engineering was identified as one of the strongest-performing sectors for permanent recruitment demand during September, alongside IT & Computing.

The REC's latest skills shortage data also highlights continued demand for specialist engineering professionals, including:

• Senior Electronic Engineers
• Electrical Design Engineers
• Control Systems Engineers
• Robotics Engineers
• Space Technology Engineers
• Field Service Engineers
• Technical Sales
• Electronics and Embedded Systems specialists

Technology-related shortages remain equally evident, particularly among:

• AI/ML Engineers
• Software Engineers
• Software Developers
• Cyber Security professionals
• Data Engineers
• Full Stack Developers
• Software Architects

These ongoing shortages demonstrate that, despite wider economic uncertainty, employers continue to compete for highly skilled technical talent.

Candidate Availability Continues to Rise

Candidate availability increased during September however, the rate of growth eased to its slowest level in three years. 

This trend aligns with wider labour market data published by the Office for National Statistics (ONS), which shows continued changes in employment, vacancies and workforce participation across the UK labour market.

Overall, the number of job opportunities are 702,000.

While redundancies and slower hiring activity continue to add professionals to the active candidate pool, the slowdown in availability growth could indicate that labour supply is beginning to normalise.

This is particularly important in engineering, electronics, semiconductor, defence, aerospace and advanced technology markets, where critical skills shortages remain despite broader increases in candidate numbers.

Salary Growth Moderates

Permanent salaries and temporary pay rates continued to rise during September, although both measures softened compared to previous months.

Businesses continue to face pressure when recruiting highly skilled engineering and technology professionals, but improved candidate availability and ongoing cost-control measures have helped moderate pay inflation.

Despite this moderation, competition for specialist technical talent continues to support salary growth in many STEM disciplines.

Redline Group's View

The UK's recruitment market continues to show encouraging signs of recovery, particularly within engineering and technology sectors.

The return to growth in permanent hiring and continued investment in engineering and digital skills all point towards increasing confidence among employers. However, candidate shortages across critical technical disciplines continue to present challenges for organisations seeking specialist talent.

As businesses prepare for growth opportunities heading into 2027, partnering with an experienced engineering and technology recruitment specialist can help secure hard-to-find professionals before competition intensifies further.

Whether you are looking to strengthen your engineering team or considering your next career move, Redline Group continues to support businesses and professionals across Electronics, Semiconductor, Defence, Aerospace, IoT, Automation and High Technology sectors.

To arrange a conversation with one of our specialists, please get in touch with one of our team, email info@redlinegroup.com or call 01582 450054.