Permanent placements in the UK fell in October at the second-fastest pace this year, ending a run of improving jobs data and raising doubts about whether the recovery in hiring can survive the current squeeze on business costs.

The figures come from S&P Global data compiled by researchers at KPMG and the Recruitment and Employment Confederation (REC), the industry body for UK recruiters. Vacancies also declined last month, although the drop was the softest in more than two years — a detail that cuts both ways, signalling weaker demand but at a decelerating rate.

What drove the reversal?

Researchers attributed the fall in permanent placements, together with the first decline in temporary billings since March, to rising borrowing costs and higher energy prices weighing on firms. Jon Holt, chief executive of KPMG UK, said struggles to manage costs could further erode hiring confidence.

"October saw employers pull back on hiring in the month leading up to the Budget, ending a run of more positive news over recent months," Holt said.

He added that businesses would now assess whether the Budget's measures gave them "enough stability to absorb the external pressures and higher costs they face" — a promise of resilience that remains untested. Holt's caveat was explicit: with the Bank of England raising interest rates and inflation set to keep climbing, "there is a risk the green shoots we had been seeing in the jobs market could stall."

Was the Budget a turning point?

Maxine Bligh, interim chief executive at the REC, pointed to resilience in hiring across London and the north of England as encouraging. She still called the Budget a "missed opportunity for both jobs and growth" — a judgement that suggests the fiscal package did little to offset the cost pressures employers name as their main constraint.

The survey itself does not settle the question. It measures placements and billings, not employer intentions, so any post-Budget effect will only become visible in later releases.

What does this change for interest rates?

A slowing jobs market could weaken the case for another imminent rate hike. Bank of England policymakers argued on Thursday that signs of stabilisation in the economy had added to inflationary pressures. Cooler hiring, by that logic, works in the opposite direction. Rate-setters, however, weigh the labour market against inflation data, and the survey offers only one input.

Official figures published separately by the Office for National Statistics (ONS) put vacancy levels below 700,000 for the first time in more than five years — a threshold that frames how far demand for labour has retreated since the post-pandemic hiring boom.

Where demand still exists

The KPMG and REC analysis did identify pockets of strength. Employers reported increased demand for workers in:

• IT and computing
• Engineering
• Construction

That concentration matters for anyone reading the headline number as a uniform decline. Skills shortages in technical fields have persisted through broader slowdowns before, and the survey suggests the same pattern is holding.

The open question is whether October marks a pause or a trend. Holt's own framing — green shoots at risk of stalling — captures the uncertainty. The next round of placement data, and the ONS vacancy count that follows it, will show whether employers absorbed the Budget and higher rates, or simply stopped hiring while they wait.