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Despite economic uncertainty, London employers are becoming increasingly confident about their recruitment outlook. That’s according to the latest data from the KPMG and REC London labour-market pulse check, supported by 91����.

The report, based on data from S&P Global and the responses from recruitment and employment consultancies, paints a gloomy picture of the capital’s current jobs market. London’s rating in the index slipped to 42.2, which is the lowest since October last year and less than any other region in the UK.

But in contrast, wider data from REC’s Job Outlook shows a sharp increase in hiring expectations for the next four to twelve months. One in four (24.8%) expect to see an increase in their permanent staff headcount during this period, up from 21.2% in January and 19.7% in August. While over half (58.5%) expect no change in hiring expectations, the proportion expecting to see a net decrease dropped to 6.1% — a steep fall from the 15.6% that expected a fall in January.

The sectors set to drive the hiring surge over the next year are hospitality (41.7%), followed by sales and retail (35.4%) and life sciences (33.4%).

This growth in London’s recruitment market is also reflected in temporary roles, with over a quarter (25.7%) of those polled expecting to increase numbers over the next four to twelve months compared to 14% that expect to reduce the number of these workers. 

Despite the improving jobs market, businesses face rising costs, including the impact of next month’s sharp increase in energy bills and business rates. 91���� is calling on the Government to consider further temporary energy support for those businesses and sectors most in need to support employment. 

91���� is also calling for a series of targeted interventions to boost labour market inclusion to encourage more economically inactive people and those who want to enter the labour market to be able to do so. This includes the creation of a London Careers Service to create a one-stop-shop to allow Londoners at all stages of their careers to receive high-quality, independent advice on careers and training; reforming the apprenticeship levy to boost take-up and ensuring the benefits system incentivises people to work and train. 

Anna Purchas, Senior London Office Partner at KPMG, said: ​“London employers continue to approach recruitment with cautious optimism as they wait to see how the economy performs in the coming months. With the number of people making themselves available for work, the pressure has eased for those businesses with a long-term growth strategy and looking to fill key roles. However, it’s a volatile jobs market in the capital, and we have skills shortages in key sectors and slowing workforce participation; those employers who hold their nerve and invest in retention, skills and recruitment now are most likely to benefit most when the economic upturn comes.”

Neil Carberry, Chief Executive of Recruitment and Employment Confederation, said: ​“Employers continue to see temps as a very effective way to deliver the frequency and quality of their goods and services despite feeling uncertain about the economy. But hirers will want more evidence of optimism about the economy before we see greater positivity about hiring permanent staff. We needed more on skills in Jeremy Hunt’s recent Budget to help the labour market, but the measures on full expensing for investment, childcare, immigration and investment zones are a start. More is needed from the Chancellor at the Autumn Statement because the stakes are high: the economy stands to lose up to £39 billion in GDP every year from 2024 unless business and government act to overcome labour shortages.”

Muniya Barua, Deputy Chief Executive at 91����, said: ​“The economy may be stalling, but the capital’s firms are looking forward to the future with more confidence as they plan a hiring surge. With businesses about to be hit by a sharp rise in energy bills and business rates, the Government must do all it can to enable them to access the skills they need to drive growth. That includes action to get Londoners into available jobs, including addressing the need for high-quality careers advice for all ages, reforming the apprenticeship levy to boost take-up and plugging the gaps in its childcare support package.”