Report on Jobs: Recruitment landscape improves as permanent placements stabilise and temp billings rise further

Key findings

• Temp billings growth remains among quickest since early 2023
• Stronger upturns in pay for both permanent and temp staff
• Temporary vacancies rise for first time in two years

Summary

The latest KPMG and REC, UK Report on Jobs data, which are compiled by S&P Global, showed a relative improvement in hiring conditions across the UK as the second half of 2026 began. Permanent staff appointments stabilised, following a 45-month period of decline, while temp billings rose further.

Vacancies data meanwhile pointed to the first increase in demand for short-term workers for two years and the softest drop in permanent vacancies in 22 months. At the same time, pay indicators signalled stronger increases in both starting salaries and temp wages. Whilst the availability of candidates continued to rise markedly, the rate of growth slipped to a five-month low, driven largely by a softer rise in temporary labour supply.

The report is compiled by S&P Global from responses to questionnaires sent to a panel of around 400 UK recruitment and employment consultancies.

Permanent placements stabilise and temp billings rise for fourth straight month

Permanent placements stabilised in July, following only a marginal decline in June, ending a 45-month downturn. Recruiters noted that demand for permanent staff remained subdued amid political and economic uncertainty and higher labour costs, though some employers continued with hiring plans linked to new projects. At the same time, more employers sought flexible workforce solutions, supporting a further rise in temp billings, with growth among the strongest seen in the past three years.

Temp vacancies rise for the first time in two years

Latest data pointed to a fresh rise in demand for temporary workers across the UK. Though modest, the rate of growth was the quickest seen since August 2023. At the same time, permanent vacancies fell at a slower, but still solid rate. As a result, overall demand for workers fell at the softest pace in 22 months.

Rates of pay growth improve in July

Pay trends continued to improve in July, with recruiters often commenting on a lack of suitably skilled or experienced candidates for roles. The rate of starting salary inflation was solid, having reached the highest in six months, whilst temp wage growth hit a 26-month high. However, the upturn in starting salaries remained much slower than the long-run trend amid a further steep rise in candidate availability.

Candidate numbers rise at softer but still sharp rate

The availability of candidates to fill roles continued to increase in July, stretching the current period of growth to nearly three-and-a-half years. The rate of expansion slipped to the lowest since February, but remained sharp overall. This reflected softer upturns in both permanent and temp candidate numbers, with the latter rising at the slowest pace since May 2023. The latest increases in staff supply were generally linked to redundancies and a lack of job opportunities.

Regional and Sector Variations

London and the Midlands recorded renewed upturns in permanent staff hiring in July, with growth hitting a near four-year high in the capital. Meanwhile, further declines were recorded in the South and North of England.

The North of England recorded the steepest upturn in temp billings, followed by London. A milder increase was meanwhile seen in the South of England, while billings fell slightly across the Midlands.

Demand for permanent workers rose across three of the ten monitored employment sectors, with Nursing/Medical/Care seeing the steepest rate of growth. The sharpest reductions in vacancies were meanwhile recorded across the Retail and Hotel & Catering sectors.

Temp vacancies increased across seven of the monitored sub-categories during July, led by Blue Collar and Engineering. The most pronounced drop in demand was seen for short-term Retail workers.

Comments

Commenting on the latest survey results, Callum Licence, Group Head of Advisory, KPMG UK and Switzerland, said:

“Despite ongoing uncertainty it’s encouraging that businesses are starting to press ahead with investment, which means across the board we are starting to see the data moving in the right direction. This is most pronounced in the continued rise of temporary work, where employers have been looking at flexible approaches and hiring has been growing for several months, and permanent hiring is starting to turn a corner. 

“Over the past 45 months we have seen the longest recorded period of contraction in the permanent placements index, so to finally have it stable is a big milestone. With a new Government in place, businesses will be looking for signs that the new policies can translate into greater confidence to invest and hire”.

Maxine Bligh, Recruitment and Employment Confederation’s Chief Membership & Innovation Officer, said:

“Rays of light are beginning to break through for the job market as employers revive hiring plans. Temporary vacancies are up for the first time in two years, while recruiters’ revenue from supplying temporary workers has risen for a fourth consecutive month. And the permanent market is stabilising. Remarkably, this is the first month without a decline in permanent placements since Liz Truss resigned as Prime Minister in 2022, underlining just how prolonged the downturn in permanent hiring has been.

“That makes it all the more important that the government takes decisions now that builds business confidence and momentum in hiring. This means action to bring the Industrial Strategy to life and exercising pragmatism around the implementation of the Employment Rights Act, particularly guaranteed hours proposals. The Autumn Budget is a great opportunity to give businesses the shot of confidence they need to hire and invest.

“If the government is serious about getting more young people their first vital opportunities of work they must think carefully about the balance of their Make Work Pay Agenda by easing mounting costs and red tape around employment.”

Methodology

The KPMG and REC, UK Report on Jobs is compiled by S&P Global from responses to questionnaires sent to a panel of around 400 UK recruitment and employment consultancies. 

Survey responses are collected in the second half of each month and indicate the direction of change compared to the previous month. A diffusion index is calculated for each survey variable. The index is the sum of the percentage of ‘higher’ responses and half the percentage of ‘unchanged’ responses. The indices vary between 0 and 100, with a reading above 50 indicating an overall increase compared to the previous month, and below 50 an overall decrease. The indices are then seasonally adjusted.

Underlying survey data are not revised after publication, but seasonal adjustment factors may be revised from time to time as appropriate which will affect the seasonally adjusted data series.

For further information on the survey methodology, please contact economics@spglobal.com.

Full reports and historical data from the KPMG and REC, UK Report on Jobs are available by subscription. Please contact economics@spglobal.com