UK hiring cools as starting pay accelerates amid global slowdown

Britain’s labor market showed a striking contrast in December: employer placements continued to slide for the 39th consecutive month even as starting salaries for permanent hires accelerated to their strongest pace since May, according to the Recruitment and Employment Confederation and KPMG survey published Jan. 12, 2026. The dual signals deepen uncertainty over whether soft hiring will ease inflationary pressures or whether rising entry-level pay will sustain wage growth.

The REC/KPMG survey reported continued declines in placements, a proxy for hiring activity across permanent and temporary roles, while recording an uptick in starting pay for permanent jobs. Recruiters’ demand measures remain subdued, reflecting weakness across a range of sectors even as firms raise offers to attract scarce candidates for some roles.

Across the Atlantic, the U.S. Bureau of Labor Statistics released preliminary payroll data for December that underscored the muted global backdrop. Nonfarm payrolls expanded by just 50,000 jobs, and the unemployment rate edged down to 4.4 percent from a revised 4.5 percent in November. The December figures capped a year in which the U.S. economy added roughly 584,000 jobs in 2025, the weakest annual gain since 2003 outside recession years.

Sector detail showed an uneven picture. Leisure and hospitality, especially food services and drinking places, was the largest contributor to December gains, adding about 47,000 jobs, while private education and health services contributed roughly 41,000. Government payrolls rose by 13,000 and financial activities by 7,000. Offsetting gains, retail shed about 25,000 jobs, construction lost 11,000, professional and business services fell by 9,000, manufacturing declined by 8,000 marking an eighth consecutive month of losses, and transportation and warehousing fell by roughly 6,600.

Short-term momentum measures painted an even weaker picture. The three-month moving average of payroll growth was approximately negative 22,000, and private payrolls rose by about 37,000 in December with a three-month private average near 29,000. Since May 2025, monthly average job gains slowed to roughly 12,000 in the second half of the year.

Revisions to prior months darken the outlook further. The BLS revised October payrolls to a 173,000-job decline from an earlier -105,000, and adjusted November to a 56,000 gain from 64,000, shaving about 76,000 jobs from prior reported totals. The BLS’s annual benchmarking process in January could produce larger downward adjustments; preliminary government reconciliation work suggested the potential for substantially lower counts for parts of 2024-25, with one early estimate implying nearly 911,000 fewer jobs for the year ended March 2025.

Market and policy implications are stark. Rising starting pay in the UK presents a conundrum for the Bank of England: weak placements argue for a looser stance while faster entry-level pay risks embedding wage-driven inflation. In the U.S., Federal Reserve Chair Jerome Powell has flagged that nonfarm payrolls may have been overstated by roughly 60,000 per month in 2025, and economists warn that forthcoming revisions could convert the year’s “snail-like growth” into growth more akin to recessionary conditions. As central banks weigh rate paths, the coming weeks of data and benchmarking will be decisive for markets and monetary policy.