Job market stagnation in the UK

Job market stagnation in the UK

The UK job market is in a tailspin. Two new reports suggest the labour market remains fragile as companies remain cautious about hiring new staff amid economic uncertainty and cost pressures.

The country’s monthly employment index is at its lowest level in nearly 15 years, according to a report by accounting and consultancy firm BDO, published on Monday. The index last fell this low in March 2011, when the job market was recovering after the global financial crisis.

Employment index down -

According to the report, the index, which measures employment trends, the number of employees and labour demand, was 93.30 in February, the same as in January. A reading above 95 indicates growth and below indicates contraction. The report said the index’s decline since the start of the year has stabilised somewhat but shows little sign of a significant recovery in the short term.

Another report by KPMG and the Recruitment and Employment Confederation (REC) said that the demand for both permanent and temporary workers fell in February.

Unemployment has increased -

Government figures also show a similar picture. In the last quarter of 2025, the unemployment rate in the UK rose to 5.2 percent, which is the highest in five years. For young people, it is the highest in almost 11 years. The country's Office for the Budget Responsibility has forecast that the unemployment rate could reach 5.3 percent this year. Earlier, the agency had predicted 4.9 percent unemployment in November.

Some sectors of the economy are moving -

However, the BDO said that its business output index rose to 98.80 in February, which is the highest in a year. This improvement was mainly due to increased activity in the services sector. This index has been showing a recovery trend for three consecutive months.

Sector-wise picture -

The demand for permanent workers increased only in the engineering sector last February. In contrast, the retail trade and hotel and catering sectors saw the biggest declines in permanent recruitment. The retail sector also saw the biggest declines in temporary jobs.

KPMG-UK chief executive John Holt said that businesses are once again facing unexpected economic shocks due to global events, including the crisis in the Middle East. As a result, many organisations are monitoring the situation and remaining cautious in their recruitment.