London’s professional vacancies fall 30% between July and September as hiring loses momentum

Morgan McKinley’s latest analysis of London’s professional hiring market shows vacancies fell 6% in Q3 compared with Q2 and 11% year-on-year. But the quarterly figures mask a much sharper deterioration as Q3 progressed. There were 1,719 professional vacancies in July, falling to 1,449 in August and just 1,200 in September, a 30% decline across the quarter.

Vacancies decline further in Q3, but permanent placements are on the rise

The continued fall through September is particularly notable. August typically sees recruitment activity soften as businesses and candidates take time away from the market, but vacancies failed to rebound as businesses returned after the summer. Instead, September ended with vacancies at their lowest level of the quarter, suggesting the slowdown extends beyond the usual seasonal effect.

This is consistent with the wider UK recruitment market. The KPMG/REC Report on Jobs recorded a further decline in vacancy demand in August alongside a marked increase in candidate availability. However, permanent placements increased for the first time in almost four years, suggesting this is not a wholesale hiring freeze.

Employers prioritise filling skills gaps and staffing high-growth roles

Employers are still recruiting, but becoming more selective about where they commit headcount. The Bank of England’s latest intelligence supports this picture, with recruitment increasingly focused on specific skills gaps and growth or investment projects. There are still pockets of strong professional-sector demand, including IT, tax, employment law, restructuring and engineering consultancy.

That selectivity comes against a fragile business backdrop. London entered Q3 with an already weaker confidence backdrop, with ICAEW’s London business confidence measure falling to -11.9 in Q2 from +3.5 in Q1. Employers are balancing the need to invest and grow against higher employment costs, borrowing costs and uncertainty over the future path of interest rates, meaning the commercial case for each new hire is coming under greater scrutiny.

Uncertainty around upcoming budget drives delays in discretionary hiring

The Budget on 28 October could add to that caution. Following the increase in employer National Insurance contributions in the first Labour Budget, businesses are already operating with a higher employment cost base. Uncertainty over further measures may encourage some employers to delay discretionary hiring until they have greater clarity. The message from Q3 is therefore not that London has stopped hiring, but that the threshold for hiring has become higher. Employers are prioritising professionals who can address immediate skills gaps, improve productivity or directly support growth and transformation.

After starting Q3 with considerable momentum, London ended September with professional vacancies almost a third lower than in July. Q4 will show whether that represents a temporary loss of momentum or the beginning of a more sustained period of caution.