UK employers’ hiring confidence for the third quarter of this year has dropped 12%, the steepest quarterly fall in recent years.

ManpowerGroup’s Employment Outlook Survey showed a hiring outlook of +19%, a decline of 12 percentage points compared to the second quarter of this year.

The survey, which asks more than 2,000 businesses about their hiring intentions for the three months ahead, found that several sectors planned to reduce headcount rather than hire: communications services (-7%), energy and utilities (-3%), and ‘other’ including government, public sector and education (-5%).

The sectors where employers had the most positive hiring intentions included IT (+47%), industrials and materials (+29%), financials and real estate (+28%), and healthcare and life sciences (+21%).

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Consumer goods, transport and logistics all had positive hiring intent, but still below the national average, Manpower found.

Petra Tagg, a director at the company, said the drop-off was more of a “one-off reset” than a cause for concern.

“After months of uncertainty, hitting this new low is a symptom of the entire labour market re-aligning after the changes imposed by the [employers’] national insurance and living wage increases, alongside the recent uncertainties of the US trade tariffs,” she said.

“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 last time there was a similar downturn in hiring intentions was in the second and third quarter of 2020 at the beginning of the Covid pandemic.

Tagg added: “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.”

Almost two-thirds (64%) of employers blamed economic challenges for a negative impact on their hiring intentions, compared to 36% attributing it to this in the previous quarter.

Fifty-five percent said market changes had reduced demand for some jobs, and a similar proportion said their company was reorganising or downsizing.

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