The Only Way is Up – UK Labour Market Hits Rock Bottom
- Employers in the UK report a hiring outlook of +19%, marking a decline of 12% on the quarter as hiring confidence plummets
- The drop is considered a ‘reset rather than a trend’ as markets react to higher costs and trade challenges
- Comms, Energy & Utilities sectors lead the negative hiring charge
Employment confidence has plummeted across all sectors in the UK, with the latest ManpowerGroup Employment Outlook Survey showing a sharp decline in hiring intentions for the third business quarter of 2025.
The Net Employment Outlook, calculated by surveying 2,000+ UK businesses about their recruitment plans for the months ahead, is +19% for Q3, a positive albeit significantly reduced Outlook (-12%) from the previous quarter as market volatility dampens confidence. For the first time since 2021, employers across several sectors are showing a negative intent to hire (i.e. more planning to reduce headcount than increase) in Communications Services (-7%), Energy & Utilities (-3%), Public Sector (-8%).
Petra Tagg, Director, ManpowerGroup UK said:
“The vast drop this quarter marks a one-off reset that we have been anticipating to the employment market. After months of uncertainty, hitting this new low is a symptom of the entire labour market re-aligning after the changes imposed by the National Insurance and Living Wage increases, alongside the recent uncertainties of the US trade tariffs. From here, employers will ‘wait and see’ to gauge the volume of the reset rather than making any swift decisions towards the end of the year.”
The survey was carried out between late April and early May after the latest employer legislative changes had come into effect and during the UK-US tariffs discussions. The last time a similar downward trend in the Outlook happened was in Q2/Q3 2020 during Covid-19 pandemic.
The sectors in which employers are showing the most positive intent to hire are IT (+47%), Industrials and Materials (+29%), Financials & Real Estate (+28%), and Healthcare and Life Sciences (+21%). There is also positive hiring intent – though below the national average – for employers in Consumer Goods & Services (+16%), Transport, Logistics & Automotive (+15%).
“We’ve been anticipating this drop off in hiring plans so that the economy can begin rebuilding. Green shoots have already started to pop up, and most notably we’ve seen temporary hiring demand begin to return to our books. Businesses are taking a proactive and pragmatic approach to
their optimism and seeking to ‘try before they buy’ with temporary staff then converting to permanent when the time is right. It began with warehousing, driving & logistics; temp staffing demands have begun to return – which also tells us that consumer spending is on the rise,” Tagg continues.
Tagg concludes: “The UK Government’s immigration changes and trade policy shifts are fuelling hiring uncertainty. With 64% of employers citing economic challenges as the top barrier to recruitment—almost double Q2—businesses are stretched thin. Yet history shows resilience: post-COVID demand eventually bounced back. As the economy stabilises, we could see hiring pick up again by year-end, driven by the need to futureproof workforces and diversify talent pipelines despite current constraints.”
