August 2025 Jobs Market Report
Headline Findings
- Hiring activity continues to slow, but the decline is easing - both permanent placements and temporary billings saw the smallest drop in 3 months.1
- Candidate availability rose at its fastest rate since the pandemic, driven by rising redundancies and fewer vacancies.2
- Job vacancies continue to fall, reaching the lowest point in 4 years.3 The slowdown is widespread across sectors, with construction as the key exception.4
- Pay growth is cooling significantly, with starting pay rising at the slowest pace in 4.5 years.5
- Unemployment edged up to 4.7% - the highest rate since 2021.6 Though this remains low by historic standards.
What this means for candidates
For job seekers and employees, these trends mean a more challenging environment than a year ago, but not an impossible one. The key takeaways from this latest jobs report are:
- Competition for jobs has intensified: With more people job-hunting and fewer new vacancies out there, candidates should be prepared for a longer search and a need to stand out. Try not to let a longer job-hunting process affect your confidence – it may well be due to the market, rather than your skills.
- Be prepared to manage your salary expectations: For most, it seems the days of large pay hikes for job-hopping have faded for now. Of course, you should still negotiate strongly for the best salary you can get, just be mindful to be realistic.
- Keep an open mind towards your search: Being flexible can pay off – many employers may remain cautious about permanent hiring but have temporary or contract opportunities available. This can be a great way to showcase your skills and develop relationships from within the organisation, putting you in a great position for future permanent work there.
While these developments are hardly cause for celebration, there is still plenty you can do to ensure job-hunting success.
With the rise of “one-size-fits-all” applying, where many candidates use a single CV to apply for very different roles, and rely too heavily on AI to write applications7, standing out from the crowd is easier than before.
Make sure to tailor your CV to the roles you’re applying for so that you are emphasising the right experiences and skills. Also bear in mind that, while AI can be a great tool, overuse will make your applications sound the same as everyone else using it! The best approach is to write in a way that is polished and professional, but also authentically you.
Above all, stay proactive and positive. Focus on what you can control, whether that is upskilling, tailoring applications, practicing your interview technique, building your network, or simply finding ways to stay motivated. These efforts pay off, not just in securing your next job, but in strengthening your long-term career prospects.
What this means for clients
For employers and hiring managers, the recent shifts present a mixed picture:
- Greater hiring opportunities than before: The loosening of the labour market presents opportunities for employers who are prepared to get ahead of the curve. Increased candidate availability combined with fewer job vacancies means employers are likely to have greater bargaining power and a wider talent pool to select from – Q4 2025 may well be a better time to hire than when the market rebounds.
- Wage pressures continue to ease: The latest data show starting salaries and temp pay are increasing at the slowest rate in 4.5 years.8 This is a significant change from 18 months ago, when employers often had to raise wages or offer perks to attract or retain staff. That said, we are still in an inflationary, high cost-of-living environment, so employees and candidates will be sensitive to any real income decreases.
- Skill shortages remain obstinate:
Despite the larger candidate pool, nearly a third of employers, across both the public and private sector, report having hard-to-fill vacancies.9 Certain sectors experience these challenges more acutely than others – with construction, health and adult social care, and manufacturing facing persistent skill shortage vacancies.10
Given the economic headwinds, it’s understandable that many employers are exercising caution in their hiring. A survey of more than 2000 employers found that hiring intentions for the next quarter are at a record low (excluding pandemic figures).11 Higher employment costs, stagflation risks, and uncertainty regarding details of the Employment Rights Bill and the Autumn Budget are all factors affecting confidence.
Despite this, employers should be careful about cutting back too far on hiring or training. Doing so can stretch existing staff, lower morale and lead to missed opportunities when things pick up. With the Bank of England beginning to lower interest rates, and inflation easing, we should hopefully start to see improved business conditions. Should wage growth continue alongside these trends, we could see a virtuous circle of stronger consumer and business confidence.
In the meantime, one strategy during uncertain times is to utilise temporary and contract staff to stay agile. The flexibility of temp workers can help you scale your workforce to demand without long-term spending commitments. This can also be a great way of assessing and developing talent – providing a ready-made talent pipeline for future permanent hires.
1, 2, 4, 5, 8 KPMG and REC, UK Report on Jobs – August 2025
6 https://www.ons.gov.uk/employmentandlabourmarket/peoplenotinwork/unemployment/timeseries/mgsx/lms
7 https://hrreview.co.uk/hr-news/recruitment/one-in-two-applicants-use-ai-tools-to-write-cvs/382040
