UK employers’ confidence in making investment and hiring decisions has dropped by 6% this quarter to a net +2, down from a near-term high of net +16 recorded in the three months to June 2024, according to the latest JobsOutlook report from the Recruitment & Employment Confederation (REC) and Savanta ComRes.

The quarterly fall was driven by a sharp decline in confidence in August to net -7, after which it recovered strongly through to net +9 by October. The +2 still shows employers getting more confident across the quarter.

Savanta ComRes interviewed a sample of 504 UK employers involved in hiring between 5 August and 22 October 2024.

The survey also found that employers’ confidence in the UK economy performance improved by one point (net: -25) when compared to the three months to August. Month-to-month confidence improved in October (net: -17) compared to September (net: -32). While this trend is still negative, it has been improving across the year.

Meanwhile, short-term permanent hiring intentions remained positive but fell 3% this quarter (compared to the three months to August) to a net +11. But London remained a notable positive outlier, improving from net: +20 to net: +27 between the two periods.

Medium-term permanent hiring intent was very similar to short-term sentiment in this period, witnessing a small decline of two points. Yet in London, sentiment improved from net: +23 to net: +25 between the two periods.

The report also found that 45% of employers are unable to state their short-term plans for agency worker hiring.  Moreover, the uncertainty intensified across the period, reaching two-thirds (67%) who could not articulate their plans in October.

The absence of plans was heightened across the quarter in two groups: employers in the North (reported by 73%) and mid-sized (50-249 employee) enterprises (77%).

Similarly, in the medium-term outlook for agency worker hiring, half of the UK’s employers (51%) who utilise agency workers were unsure. The uncertainty among employers about temp hiring likely reflects that the survey was undertaken ahead of one of the most eagerly anticipated Budgets for years, making firms uncertain of their next hiring moves until they heard what the chancellor had to say.

There is also the broader context of economic volatility, changing labour market conditions and evolving business needs, the report noted.

Neil Carberry, REC Chief Executive, said in a press release, “The strong growth in employer confidence about hiring and investing in their own firms slowed a little as firms awaited a Budget they knew would be tough. The scale of the changes to Employers National Insurance – in particular, the decision to increase the tax far more for lower earners – will be a headwind for hiring confidence from here on in. But the economy and the labour market are subject to far greater trends than government action, and the gentle recovery of employer views on the wider economy will be what ultimately drives demand in 2025. London appears to be leading the way on this.”

Carberry continued, “The big question now is not if firms will restructure their hiring plans post-Budget, but whether wider economic growth will make this an annoyance in a growing wider economy, or a headwind that firms struggle with in a tough economy.”

“Confidence trends this year suggest the labour market will remain resilient, despite ongoing economic challenges in 2025,” Carberry said. “Businesses are adapting, embracing new ways of working and determined to succeed.”