UK recruiters saw hiring pick up for the first time in four years in August, a survey showed, adding to evidence of a tentative improvement in economic confidence. An index of permanent job placements, published on a monthly basis by KPMG and the Recruitment & Employment Confederation, edged into positive territory for the first time since September 2022, rising to 50.5 from 50 in July. Billings of temporary staff also increased, with an index reading of 52.4 pointing to the second-strongest month since April 2023.

"Confidence is beginning to return to the market," said Jon Holt, chief executive and UK senior partner at KPMG, as he urged the government to use next month's Budget to "turn these green shoots into sustained positive momentum". The REC's survey adds to evidence that the UK's weak jobs market was stabilising and business and consumer confidence were improving — albeit from a low base — before a renewed rise in gas prices and sovereign bond yields that again threatens to hold back the economy.

Payroll employment has been flat or falling in the UK for the best part of two years and the number of job vacancies is still falling, according to the latest official data. But the REC's survey suggests demand for staff is now stabilising in the private sector, even though public sector vacancies continued to decline in August. A separate survey published by the Bank of England on Friday showed firms expect to increase headcount in the year ahead following a year of cutbacks.

S&P Global's PMI survey, published on Thursday, also showed UK business sentiment strengthening in August with measures of employment — while still negative — at their strongest since last October. Consumer confidence has also improved. Data released on Friday showed private new car registrations were almost a fifth higher than a year earlier in August, with the surge fuelled by demand for electric vehicles. Earlier Bo E figures showing growth in consumer credit suggest that households are dipping into savings to sustain spending as inflation rises.

Data due on Friday is expected to show GDP growth on track to beat Bo E forecasts for the third quarter, boosted by warm weather and World Cup festivities. However, economists warn that higher energy costs will weigh on consumer spending and GDP growth over the remainder of 2026, while uncertainty over the Iran war and the policy direction of UK Prime Minister Andy Burnham's new administration could lead businesses to delay investments. Business groups, including the REC, argue that the fragile recovery will be at risk if the new chancellor, John Healey, raises taxes to fill a fiscal hole caused by rising borrowing costs.