UK recruiters reported the strongest increase in starting pay in nearly a year and a half in January, as competition for in-demand skills intensified despite overall hiring remaining subdued, according to the latest KPMG and Recruitment & Employment Confederation UK Report on Jobs. The survey, compiled by S&P Global from responses gathered between Jan. 12 and Jan. 26, showed that starting salaries rose at a solid pace, marking the quickest rate of increase for almost 18 months.

Temporary wages also climbed, reaching the joint-highest rate of inflation since May 2024. The data pointed to stronger pay pressures even as permanent placements continued to fall, though at the slowest pace seen in a year and a half. Recruiters said the rise in pay was driven by competition for skills that remained in short supply.

Permanent staff appointments declined again in January, but the rate of reduction eased to the weakest level in 18 months. Temporary billings expanded slightly for the first time in three months, signaling limited growth in short-term hiring. Despite the continued drop in vacancies, the report noted that pay pressures strengthened at the same time, reflecting tighter conditions for certain skills rather than a broad-based hiring recovery.