New Year, New Job: UK Employment Market Rebounds in Q1
The latest Employment Outlook Survey (MEOS) reveals a Net Employment Outlook of +13% for Q1 2026 – up two points on the previous quarter, marking the first improvement since mid-2025. While still 16 points below last year’s high, this shift signals a return of confidence after months of uncertainty.
“The labour market is bouncing back, after a period of paralysis for British businesses unable to make decisions for fear of government-proposed labour market policy changes; the latest budget announcement has unleashed the pent-up demand so many job seekers had been waiting for,” said Michael Stull, Managing Director, ManpowerGroup UK. “A two-point rise to the Employment Outlook may seem modest, but it marks a notable shift in the UK’s trajectory. After months of negative rhetoric, we’re seeing a return of optimism to hiring intentions, with just the finalisation of the Employee Rights Bill left to springboard the economy further.”
Stull added: “With the rise in national minimum wage it’s not surprising that the hospitality sector is recording the worst Outlook of our survey, -9%, falling three percentage points on the quarter. While we wait to understand more on the Employee Rights Bill conclusion, which isn’t likely to come this side of the New Year, it’s small and medium sized businesses as well as sectors like hospitality and care that rely heavily on lower wage and flexible contracts that remain in a state of inertia.”
Sector highlights:
Construction & Real Estate (+24%) lead the recovery, driven by infrastructure investment and defence projects.
Information (+26%) and Manufacturing (+15%) remain resilient as demand for digital capability and skilled labour grows.
Hospitality (-9%) records the weakest outlook, impacted by rising wage costs and policy uncertainty.
Regional trends:
East, Yorkshire & Humber and East Midlands show the strongest quarter-on-quarter growth, while Northern Ireland leads in overall hiring optimism. In contrast, Wales and the West Midlands report the sharpest declines in employment outlook. As employers prepare for the Employee Rights Bill and navigate the rise of AI, mid-sized firms are leading the charge on upskilling and innovation. The UK labour market is entering 2026 with cautious optimism and a renewed focus on skills.
Find out more in the Q1 2026 Employment Outlook Survey report, featuring detailed insights on employer hiring intentions by industry, region and company size
