Employers are increasingly turning to temporary workers as they remain cautious about long-term hiring commitments, while the decline in permanent recruitment has started to ease, new figures released on Wednesday show.
Temporary billings rose for the second consecutive month in June, with the index reaching 52.7, its highest level since April 2023. A reading above 50 indicates growth on the previous month.
Permanent placements continued to fall, but the rate of decline eased sharply. The permanent placements index rose to 49.1 in June, up from 44.1 in May, marking the softest fall in three months.
The data comes from the KPMG and Recruitment and Employment Confederation (REC) UK Report on Jobs, compiled by S&P Global from responses from around 400 UK recruitment and employment consultancies.
Caution drives temporary hiring
Recruiters linked the rise in temporary work to stronger demand for flexible staffing and short-term projects, as businesses remained cautious about committing to permanent hires.
Lisa Fernihough, vice-chair of advisory at KPMG UK, said: “It’s encouraging to see some of the hiring data improve in June. Although permanent placements are still falling, the pace of decline is easing and back to a rate we were seeing before the Iran conflict put a pause on active recruitment for many companies.
“But the story of the past few months has been the pivot to temporary work. With chief execs still facing into global uncertainty, this preference for a flexible approach to hiring means they have been able to progress shorter term projects and investments without longer term commitments.”
Permanent placements have now fallen for 45 consecutive months, with recruiters citing fewer vacancies, reduced recruitment budgets and subdued business confidence. However, some recruiters reported higher activity from clients and employers moving ahead with new projects.
Temporary billings increased across all four monitored English regions, with the strongest rise recorded in the South of England.
Vacancies continue to fall
Demand for staff weakened further in June. The total vacancies index fell from 45.9 in May to 45.1, signalling the sharpest fall in demand since January. Vacancies have now declined for 32 consecutive months.
The fall was driven mainly by a steeper drop in permanent vacancies, while demand for temporary staff declined only marginally. Private sector demand for temporary workers improved slightly, but demand fell across all other categories.
Official data included in the report showed UK job vacancies fell by 4.2 percent year on year in the three months to May, dropping to 707,000. That was the lowest level for just over five years, and the lowest since the three months to November 2014 if the pandemic period is excluded.
Neil Carberry, chief executive of the REC, said: “After a long recruitment winter, these figures show truly hopeful signs. Temporary and contract work once again leads the way, as firms react to demand without yet feeling confident enough to commit to larger scale permanent hiring.”
Candidate supply remains high
Candidate availability continued to rise in June, although at a slower pace than in May. The total staff availability index stood at 60.1, down from 62.3, but still pointed to a sharp increase in the number of people available for work.
Recruiters said higher permanent staff supply was generally linked to redundancies and lower hiring activity. Temporary staff availability also rose sharply, with redundancies and a lack of new contract work cited as factors.
Starting pay also increased. Permanent starting salaries rose at the fastest rate since January, while temporary pay growth strengthened to its second-fastest pace since May 2025. Recruiters said employers were raising offers to attract skilled candidates, although pay growth remained below the long-term survey average.
Carberry said the figures showed potential for growth but warned against further costs on employers.
“With a new prime minister coming, there is a clear message here from business. The potential for the growth the country needs is here – but not if the government pours more uncertainty and cost onto the private sector,” he said.
William Furney is a Managing Editor at Black and White Trading Ltd based in Kingston upon Hull, UK. He is a prolific author and contributor at Workplace Wellbeing Professional, with over 127 published posts covering HR, employee engagement, and workplace wellbeing topics. His writing focuses on contemporary employment issues including pension schemes, employee health, financial struggles affecting workers, and broader workplace trends.
- William Furney
- William Furney
- William Furney
- William Furney
