The Rhino Report – November 2026

Welcome to this month's Rhino Report. November arrives with the Budget finally out of the way, which means employers can stop waiting for it and start worrying about it instead.

This month we're looking at why unemployment fell while the number of people on payrolls didn't, how long last month's permanent hiring recovery actually lasted (not long), why engineers are in demand while Christmas temps apparently aren't, the two million people who want a job but never appear in the unemployment figures, and the small businesses that have quietly taken their job adverts down. Mostly mixed news, with one or two numbers worth a raised eyebrow.

Every workforce planner has a list of dates that cause trouble: bank holidays, half-term, the Monday after a big match. This year they can add 19 November. HR software company BrightHR analysed absence records covering more than 1.2 million employees across 70,000 UK businesses ahead of the planned release of Grand Theft Auto VI, and found the game mentioned in 4.63% of recorded leave reasons for launch day. Across November and December, it estimates around 83,000 days of annual leave have been booked in connection with the game, including one employee who has cleared two full weeks. In fairness to all of them, this is annual leave, properly requested well in advance, which is considerably more notice than most managers get for anything else in November.

On paper, October's labour market figures were the best for a while. The ONS labour market overview published on 20 October put unemployment at 4.7% for June to August, down slightly on both the quarter and the year, while the employment rate edged up to 75.3%. Youth unemployment eased too, with 15.6% of economically active 16 to 24-year-olds out of work, down from the 16.4% we reported last month. If you only read the first paragraph of the press release, it was a decent day.

Read the second paragraph and things get stranger. HMRC's payroll data, which counts people actually being paid rather than asking a sample of households, shows 111,000 fewer payrolled employees in August than a year earlier. Vacancies fell by 21,000 to 691,000 for July to September, the biggest quarterly drop since the start of the year and, outside the pandemic, the lowest total since 2014. The Claimant Count rose to 1.701 million. So depending on which figure you prefer, the jobs market is either quietly improving or quietly shrinking, and both camps have an official statistic to wave about.

Part of the explanation lies with the survey behind the headline. The Labour Force Survey has had a difficult few years, and while the ONS says responses are now close to pre-pandemic levels, it still warns that short-term movements are volatile and advises users to focus on the longer trend. In August it also told the statistics regulator it won't be seeking to have the LFS re-accredited at all, preferring to put its effort into an online-first replacement. It's an admirably honest position for a national statistics agency, roughly the equivalent of a mechanic telling you the car will probably get you home but he wouldn't book a holiday in it.

The KPMG and REC Report on Jobs fills in some of the gaps from the recruiter's side of the desk. Candidate availability rose sharply in October, with recruiters widely pointing to redundancies and fewer job openings, which sits far more comfortably with falling payrolls than with falling unemployment. Redundancies themselves are still running at around 113,000 a quarter. Our reading is that fewer people are being hired, a steady stream are being let go, and the headline rate has improved partly because the survey says so. A market holding its breath can look perfectly calm in a photograph. The payroll data tends to be the first to show when it finally exhales.

Last month we described the permanent placements index reaching 50.5 as growth in roughly the way light drizzle is weather, and wondered whether it would turn out to be the start of something or a rounding error with good timing. We now have an answer, and it isn't the one anybody was hoping for. The November Report on Jobs, published on 9 November and covering October, found permanent placements falling for the first time in four months, and solidly rather than marginally. Temp billings, which had spent six consecutive months carrying the market on their back, fell too, for the first time since March. The REC's Maxine Bligh said the end of the two-month run showed the "fragility of confidence" employers currently have in hiring. Permanent recruitment's comeback tour, in other words, played two dates and cancelled the rest.

Timing explains a lot of it. The survey responses were collected between 12 and 26 October, in the final weeks before the Budget, and recruiters reported employers delaying or scaling back hiring because of economic uncertainty and rising costs. KPMG's UK chief executive, Jonathan Holt, pointed to further energy price shocks and a global bond sell-off pushing borrowing costs higher, and warned that with the Bank of England raising interest rates and inflation expected to keep climbing, the recent green shoots in the jobs market could stall. Faced with all of that, plenty of businesses appear to have done the sensible thing with a permanent headcount request, which is to put it in a drawer and wait for someone in finance to finish reading the small print.

It isn't uniformly gloomy. Total vacancies fell at their softest pace in more than two years, permanent vacancies at the weakest rate since August 2024, and demand for temporary workers rose fractionally after two months of decline. Starting salaries and temp pay rose slightly faster as employers competed for high-calibre candidates who were often in short supply, although both rates remain below their historical averages. The regional picture shows how differently the same month can look depending on where you're standing. London and the North of England both recorded growth in permanent placements, while the South of England saw the sharpest fall and the Midlands a solid one. The DWP has arrived at a similar conclusion from the other direction: its latest Get Britain Working labour market insights devotes a whole chapter to geographic disparities, sorting local authorities into distinct local labour market types using cluster analysis. It's a considerably more rigorous way of saying what we've been saying for months, which is that there isn't really one UK jobs market any more, just a lot of smaller ones that occasionally get averaged together.

October is traditionally when retailers start taking on the extra pairs of hands needed to survive Christmas. This year, according to the Report on Jobs, Retail saw by far the steepest fall in demand for temporary staff of any sector, while Retail and Hotel & Catering also recorded the steepest falls in demand for permanent staff. The figures are seasonally adjusted, so this isn't simply the calendar doing what it always does. Compared with a normal October, the high street is being unusually careful about how many people it brings in, which is not especially festive news for anyone hoping a seasonal job might turn into something longer. Somewhere, a stockroom is bracing itself for December with roughly the same number of people it had in August.

At the other end of the survey, six of the ten sectors tracked saw rising demand for permanent workers, led by IT & Computing and Engineering, with the REC also naming construction and accounting and finance among the risers. Blue Collar roles recorded the steepest increase in demand for temporary staff. So the same month that saw permanent placements fall also saw demand for permanent engineers go up. That sounds contradictory until you look at where the shortages sit. A business can postpone hiring a general role until after the Budget. It finds it much harder to postpone the mechanical fitter a project can't start without, or the welder whose absence leaves a dry dock very quiet and very expensive.

That matches what we've seen in mechanical engineering recruitment this autumn. Engineering demand has been one of the most consistent features of the last few editions, through the long period when permanent hiring was falling, the two months when it wasn't, and now the month when it is again. Like a reliable old van, it rarely does anything dramatic. It just keeps turning up.

The unemployment figure only counts people who have looked for work in the last four weeks and could start within the next two. Sitting just outside it is a much larger group that rarely makes the headlines. Of the 9.1 million people aged 16 to 64 classed as economically inactive in June to August, 2.07 million said they wanted a job. They don't count as unemployed, usually because they haven't been actively searching or can't start straight away, but they represent a sizeable reserve of people who could, in the right circumstances, come back into work.

Some of the movement underneath is encouraging. The number of people inactive because of long-term sickness fell by 86,000 over the year to 2.74 million. The number of students rose by 125,000, or 5.4%, to 2.45 million, and while it's impossible to prove why from the figures alone, it wouldn't be surprising if, with entry-level jobs this scarce, a few more young people had decided another year of education looked more promising than another few hundred applications. Meanwhile, the number of 16 to 64-year-olds describing themselves as retired rose by 40,000 in a single quarter, to 1.08 million, just as the State Pension age begins its rise from 66 to 67 between 2026 and 2028. Retiring earlier while the official retirement age heads in the opposite direction takes a certain amount of confidence, and presumably a reasonable pension.

For employers, the practical point is that the pool of potential candidates is bigger than the unemployment figure suggests, but it doesn't walk in by itself. People returning after illness, caring responsibilities or a long gap often need a slightly different route back: a sensible start date, some flexibility, and a hiring manager who doesn't treat a gap on a CV as a crime scene. The businesses willing to offer that are fishing in a pond most of their competitors haven't noticed is there.

The most striking number in October's ONS release wasn't in the headline at all. It was sitting in the table showing vacancies by business size. Firms with one to nine employees advertised an estimated 77,000 vacancies in July to September, down from 98,000 the previous quarter. That's a fall of 21% in three months and a third over the year. Two years ago, the same group had 138,000. Over the same period, vacancies at businesses with 250 to 2,499 staff actually rose slightly, and the largest employers were up on the year. Effectively, the whole of the quarter's 21,000 fall in UK vacancies came from the country's smallest businesses.

The ONS vacancy survey keeps hearing the same reason: smaller firms say they may not be recruiting because of increased labour costs. For a business with eight staff, a rise in employer National Insurance or the minimum wage isn't an abstract line in a forecast. It's the difference between hiring a ninth person and the owner doing that job themselves on Saturday mornings. We noted small businesses driving the vacancy fall back in August, but the pace has changed considerably since then, and a fifth of their vacancies disappearing in a single quarter is a long way from a gentle slowdown.

The Budget doesn't appear to have eased much of that pressure. The REC described it as a missed opportunity for jobs and growth, pointing out that the OBR expects the Employment Rights Act to have a negative impact on economic activity and criticising government for not excluding recruitment agencies from the guaranteed-hours proposals. For smaller employers who still need the work done, the likely response is more caution about permanent commitments and more interest in contract or interim cover and project-based labour, at least until the cost of a permanent hire looks a little more predictable six months out.

Put October's numbers side by side and the market looks less like it's falling and more like it's splitting. Large employers are holding their vacancies steady while small ones take theirs down. Engineering, IT and blue-collar demand is rising while retail and hospitality pull back. London and the North are growing while the South shrinks, and even the official statistics can't agree whether employment is going up or down. The next ONS figures arrive on 17 November, and December's Report on Jobs will be the first to cover a full month after the Budget rather than the nervous weeks before it. Until then, the safest assumption is that whatever is happening in your corner of the market probably isn't what the headline says.

See you next month.