Engineering and Technology Hiring Remains Resilient Despite Wider Market Caution

The latest KPMG and REC Report on Jobs highlights a more cautious hiring environment across the UK labour market during October, as economic uncertainty, rising employment costs and concerns ahead of the Government Budget led some employers to delay recruitment decisions.

Permanent placements fell for the first time in four months, while temporary billings also declined after a sustained period of growth. However, despite the wider slowdown, there were encouraging signs for engineering and technology employers, with demand continuing to strengthen in a number of highly skilled sectors.

In particular, Engineering and IT & Computing were identified as some of the strongest-performing sectors for contract and permanent vacancies, reinforcing the ongoing need for specialist technical talent across the UK's innovation-led industries.
 

"The fall in overall vacancies across the UK was the slowest in more than two years, with an increase in demand for permanent staff in sectors including IT, engineering, construction and accounting and finance."

Maxine Bligh, Interim Chief Executive, Recruitment and Employment Confederation (REC)

Permanent Hiring Slows as Employers Take a More Cautious Approach

October saw permanent hiring activity fall for the first time since June, ending a positive period that had seen recruitment activity strengthen throughout late summer.

Recruiters reported that many businesses adopted a more cautious approach to hiring amid economic uncertainty and concerns around increasing operational costs. Temporary recruitment also weakened, with contract opportunities declining for the first time since March.

Whilst this represents a short-term setback for the broader labour market, the slowdown appears to have been driven more by uncertainty and delayed decision-making rather than a fundamental reduction in long-term hiring needs.

For employers operating in technology-led sectors, investment plans and critical projects continue to drive demand for specialist engineering expertise.

Engineering and IT Lead Permanent Vacancy Growth

The report highlighted continued demand for Engineering and IT professionals, demonstrating that the engineering recruitment market remains resilient as employers compete for specialist technical skills across multiple industries.

Of the ten sectors monitored, Engineering and IT & Computing recorded the strongest increases in permanent vacancies during October, outperforming many traditional areas of the labour market.

This aligns closely with recruitment activity across the markets supported by Redline Group, where demand remains particularly strong for:

• Electronics Design Engineers
• Senior Electronic Engineers
• Electrical Engineers
• Embedded Software Engineers
• Control Systems Engineers
• AI & Machine Learning Specialists
• Software Engineers
• Systems Engineers
• Field Service Engineers
• Technical Sales Professionals

Despite wider economic pressures, organisations continue to invest in the technical skills required to deliver innovation, digital transformation and advanced engineering programmes.

Skills Shortages Continue Across Critical Technical Disciplines

The latest report highlights ongoing shortages across a range of specialist engineering and technology functions.

Among the most difficult positions to fill were:

• Electronics Design Engineers
• Senior Electronic Engineers
• Electrical Engineers
• Design Engineers
• Field Service Engineers
• AI & ML Engineers
• Software Engineers
• Software Developers
• Software Architects
• Cyber Security Architects
• Technical Specialists
• Technical Sales Professionals

For many employers, securing candidates with the right technical expertise remains significantly more challenging than attracting applicants.

This continues to be particularly evident as demand continues to be supported by investment within electronics, semiconductors, defence, aerospace, automation, embedded software and advanced manufacturing organisations including BAE Systems, Leonardo, MBDA and Rolls-Royce.

This activity will be enhanced by the UK governments recently launched offsets policy requiring foreign defence suppliers to invest in UK jobs, factories, and local supply chains starting April 2027. 

Under the new Offsets policy, foreign contractors could meet these requirements by creating jobs and apprenticeships, opening or expanding factories, investing in UK suppliers or transferring technology and manufacturing expertise to domestic companies. Its Defence Investment Plan sets out £298 billion of investment over the four years from 2026.

For example, a £100 million contract could require the supplier to provide up to £100 million in economic benefits to the UK. The Ministry of Defence (MOD) will decide which contracts are covered and what commitments are required on a case-by-case basis. The measures were announced during a government visit to BAE Systems’ Scotstoun shipyard in Glasgow. They form part of the wider Back British procurement approach outlined in the Budget, aimed at ensuring UK businesses benefit even when defence equipment is purchased from overseas.

What Does This Mean for Engineers?

• Demand remains strongest in defence and quantum
• Electronics remains candidate short
• Security-cleared professionals are highly sort after 

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Candidate Availability Increases Further

Candidate availability increased for the 44th consecutive month during October, with growth accelerating compared to September.

Recruiters reported that redundancies, reduced job opportunities and greater caution amongst employers contributed to a larger pool of available candidates entering the market.

While this trend provides employers with access to a broader talent pool, the increase in candidate supply has not eliminated shortages of highly skilled technical professionals.

Many engineering employers continue to face challenges recruiting experienced specialists with niche sector knowledge and proven project delivery expertise.

Salary Growth Remains Positive

Despite softer recruitment activity, employers continued to increase starting salaries and contractor pay rates throughout October.

According to the report, salary growth strengthened slightly as businesses remained willing to offer competitive packages to secure high-calibre candidates. Recruiters frequently cited the shortage of suitably skilled professionals as a key driver of pay increases.

This is particularly relevant within engineering and technology recruitment, where specialist expertise often commands a premium despite broader market conditions.

What Employers Should Take Away

While October's figures demonstrate that confidence across the wider labour market remains fragile, the underlying picture for engineering and technology recruitment is more positive.

Demand for technical expertise continues to be driven by long-term investment in:

• Semiconductor Technologies
• Electronics Engineering
• AI & Machine Learning
• Defence & Aerospace
• Automation & Robotics
• Advanced Manufacturing
• Electrification & Clean Technology
• Embedded Software Development

For organisations planning recruitment in these areas, competition for specialist talent remains active despite increasing candidate availability.

Redline Group's View

The latest report reflects what we are seeing across many of the engineering and technology markets we support.

While some organisations have become more cautious in their hiring plans following recent economic developments, demand for highly skilled technical professionals remains resilient. We continue to see strong recruitment activity across electronics, semiconductor, embedded software, defence, aerospace and industrial automation sectors.

The broader market may have paused temporarily during October, but the long-term drivers of engineering talent demand remain unchanged. Innovation, digitalisation, advanced manufacturing and critical infrastructure investment continue to create opportunities for specialist professionals and forward-thinking employers alike.

For businesses looking to secure specialist engineering talent, maintaining a proactive recruitment strategy remains essential as competition for niche skillsets continues. 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.

About The Author

Peter Livingstone is a Director at Redline Group and has worked with engineering, electronics and technology businesses for over 30 years, supporting permanent and contract recruitment programmes across the UK and Europe.