New Year, New Job! UK Employment Market Set to Rebound in Q1
- UK Employment Outlook grows two percentage points to +13% in first quarter of 2026
- Hiring confidence rebounds from the last 6 months of hesitation; but remains 16 points lower to Q1 2025
- Construction, Manufacturing and Tech lead sector resilience while Hospitality and Professional Services lag
Employers across the UK are entering 2026 ready to fulfil the deferred hiring demand of the last six months, according to the latest ManpowerGroup Employment Outlook Survey (MEOS). The Net Employment Outlook (NEO) for Q1 2026 stands at +13%, marking the first improvement, of two percentage points on the previous quarter, since Q2 2025. The NEO remains 16 points below the previous high of +30% in Q1 2025.
“The labour market is ready to bounce back, after a period of paralysis for British businesses unable to make decisions for fear of government proposed labour market policy changes; the latest budget announcement has unleashed the pent-up demand so many job seekers had been waiting for,” said Michael Stull, Managing Director, ManpowerGroup UK. “A two-point rise to the Employment Outlook may seem modest, but it marks a notable shift in the UK’s trajectory. After months of negative rhetoric, we’re seeing a return of optimism to hiring intentions, with just the finalisation of the Employee Rights Bill left to springboard the economy further.
Construction & Real Estate (+24%) lead the upward trend, up nine points quarter-on-quarter. Manufacturing (+15%) and Information (+26%) also show resilience. This surge reflects renewed infrastructure investment and the UK’s strategic defence commitments, including £1.5 billion earmarked for new munitions factories and other weapons. These developments are expected to create over 1,000 skilled manufacturing jobs and support hundreds more across the country.
Despite a year-on-year decline in tech hiring, demand remains strong as employers invest in digital capability and cybersecurity. AI is no longer confined to tech – it’s reshaping every sector, from manufacturing to finance, making it a truly sector-agnostic force in the labour market.
Stull added: “At the same time, the rise of AI presents a strategic crossroads: invest in specialist talent or upskill the wider workforce. Mid-sized firms and emerging players are leading the charge, while larger organisations continue to consolidate. There remains a big question for the UK in 2026 – how to close the productivity gap and improve growth. Firms may decide to go one of two ways: either, increase focus on upskilling all workers in AI to work smarter not harder; or, make targeted investments in advanced out-of-the-box AI solutions.”
Stull continues: “With the rise in national minimum wage it’s not surprising that the hospitality sector is recording the worst Outlook of our survey, -9%, falling three percentage points on the quarter. While we wait to understand more on the Employee Rights Bill conclusion, which isn’t likely to come this side of the New Year, it’s small and medium sized businesses as well as sectors like hospitality and care that rely heavily on lower wage and flexible contracts that remain in a state of inertia.”
East and Yorkshire & Humber show the strongest quarter-on-quarter growth, while Northern Ireland leads in overall hiring optimism. In contrast, Wales and the West Midlands report the sharpest declines in employment outlook.
| Net Employment Outlook | Q1 2025 | Q4 2025 | Q1 2026 | |
| UK | 29 | 11 | 13 | |
| Regions | East Midlands | 25 | 4 | 17 |
| East | 12 | -6 | 9 | |
| London | 41 | 17 | 14 | |
| North East | 17 | 8 | 10 | |
| North West | 33 | 19 | 16 | |
| Northern Ireland | 49 | 24 | 25 | |
| Scotland | 14 | 13 | 21 | |
| South East | 17 | -3 | 5 | |
| South West | 23 | 3 | 8 | |
| Wales | 17 | 10 | 2 | |
| West Midlands | 27 | 14 | 3 | |
| Yorkshire & Humber | 24 | 7 | 21 | |
Stull concludes: “As hiring intentions begin to stabilise, we are seeing the next phase of workforce evolution take shape. Lateral is the new linear, with employers increasingly prioritising skills and experience over traditional career progression. This shift is accelerating the move towards skills-based hiring. As we’ve seen hiring freezes and the increase in temp-to-perm contracts as work arounds we’ve also see our clients looking to hold on to their very best talent, and given the stagnation of wages they’ve focused their offering on training, sideways growth opportunities and expanding existing projects with pre-approved budgets. HR managers have been working hard through this downturn.”
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NOTES TO EDITORS
A ‘Net Employment Outlook’ is calculated by subtracting those employers who plan to reduce staffing levels from those who plan to hire staff. A positive result indicates that more employers plan to increase rather than decrease staffing levels; a negative result reflects the opposite. For international comparisons and visual library with graphs, visit manpowergroup.com.
About the Industry Sectors
ManpowerGroup has introduced an updated industry sector classification to ensure our insights more closely reflect today’s global economy. Beginning with this release, data will be reported across nine sectors: Construction & Real Estate; Finance & Insurance; Hospitality; Information; Manufacturing; Professional, Scientific & Technical Services; Public Sector, Health & Social Services; and Trade & Logistics. Historical data has been reclassified to maintain consistency over time, and national and regional results remain unchanged.
Commentary is based on seasonally adjusted data where available. Full survey results for each of the 42 countries and territories included in this quarter’s survey, plus regional and global comparisons, can be found in the ManpowerGroup Press Room at www.manpowergroup.com/meos In addition, all tables and graphs from the full report are available to be downloaded for use in publication or broadcast from the ManpowerGroup Web site at: http://www.manpowergroup.com/press/meos.cfm
About the Survey
The world leader in innovative workforce solutions, ManpowerGroup releases the ManpowerGroup Employment Outlook Survey quarterly to measure employers’ intentions to increase or decrease the number of employees in their workforces during the next quarter. It is the longest running, most extensive, forward-looking employment survey in the world, polling 40,700 employers across 42 countries and territories. The survey serves as a bellwether of labour market trends and activities and is regularly used to inform the Bank of England’s Inflation Reports, as well as a regular data source for the European Commission, informing its EU Employment Situation and Social Outlook report, the Monthly Monitor. ManpowerGroup’s independent survey data is also sourced by financial analysts and economists around the world to help determine where labour markets are headed.
About ManpowerGroup
ManpowerGroup® (NYSE: MAN), the leading global workforce solutions company, helps organisations transform in a fast-changing world of work by sourcing, assessing, developing and managing the talent that enables them to win. We develop innovative solutions for hundreds of thousands of organisations every year, providing them with skilled talent while finding meaningful, sustainable employment for millions of people across a wide range of industries and skills. Our expert family of brands – Manpower, Experis, Brook Street and Talent Solutions – creates substantial value for candidates and clients across more than 75 countries and territories and has done so for over 75 years. We are recognised consistently for our diversity – as a best place to work for Women, Inclusion, Equality and Disability, and in 2025, ManpowerGroup was named one of the World’s Most Ethical Companies for the 16th year – all confirming our position as the brand of choice for in-demand talent. For more information, visit www.manpowergroup.co.uk, or follow us on LinkedIn, Instagram, YouTube and Facebook.
