Hiring activity declined in October, reversing momentum in the jobs market over previous months. 

Data compiled by a leading industry group showed the number of permanent placements fell last month at the second-fastest pace this year as employers pulled back on hiring. 

Vacancies also continued to fall although the drop was the softest in over two years.

Researchers said the fall in permanent placements, along with the first decline in temporary billings since March, was in part due to a rise in borrowing costs from higher interest rates and energy costs hampering firms. 

KPMG UK chief executive Jon Holt said struggles to deal with costs could further weigh on hiring confidence. 

“October saw employers pull back on hiring in the month leading up to the Budget, ending a run of more positive news over recent months,” Holt said. 

“Businesses will now be assessing whether the measures announced in the Budget give them enough stability to absorb the external pressures and higher costs they face. 

“But with the Bank of England increasing interest rates and inflation set to continue rising over the coming months, there is a risk the green shoots we had been seeing in the jobs market could stall.”

Budget ‘missed opportunity’ for jobs boost

Maxine Bligh, interim chief executive at the REC, said some resilience in hiring across London and the north of England was promising although labelled the Budget a “missed opportunity for both jobs and growth”. 

A slowdown in the jobs market could weaken the case for another imminent interest rate hike, with Bank of England policymakers arguing on Thursday that signs of stabilisation had added to inflationary pressures in the UK economy. 

But the latest official data published by the Office for National Statistics showed vacancy levels dropping below 700,000 for the first time in over five years.

S&P Global data crunched by KPMG and REC researchers suggested that there was increased demand for workers in IT and computing, engineering and construction.