Employers in the UK are showing increased confidence in the economy and in their hiring decisions. Although overall sentiment remains subdued, the data suggests a gradual improvement in outlook across several labour market indicators.
That’s according to the latest JobsOutlook survey by the Recruitment and Employment Confederation (REC) and Whitestone Insight. The survey suggests reveals that confidence in the UK economy has improved by 15 percentage points since the previous quarter, reaching net -20 in the three months to June 2025. This marks a recovery from the downturn in Spring and supports a broader two-year trend towards greater employer optimism.
Confidence in making investment and hiring decisions has also moved into positive territory, with a 12 percentage point increase from net -9 in the previous quarter to net +3. This is the first time since early 2022 that sentiment around recruitment and investment has moved above zero.
The REC reports that this renewed confidence has begun to translate into stronger hiring activity across both permanent and temporary roles, particularly in London, which remains a bellwether for national recruitment trends.
Permanent and temporary hiring intentions rise
Hiring intentions for permanent staff have shown growth in both the short and medium term. In the three months to June, short-term expectations for permanent hiring increased by three points to net +13. Medium-term sentiment (covering the next four to 12 months) improved by six points to net +15, compared to the same period ending in April 2025.
Temporary and contract hiring has also strengthened. Short-term expectations for temporary hiring rose by eight points to net +12. Medium-term outlook for temporary or contract staff also saw an eight-point improvement across the quarter.
These shifts coincide with improving demand recorded in other recent labour market indicators, including the REC/KPMG Report on Jobs and the REC/Lightcast Labour Market Tracker.
“Confidence is the key to growth in 2025, so it is good that businesses are beginning to shake off some concerns on investment and hiring that they have carried for almost three years,” said Neil Carberry, Chief Executive of the REC. “Despite a Spring battering from the NICs rise, inflation and other policy costs, there is hope that businesses can step up their trading in the second half of the year.”
Policy environment will shape second-half progress
Carberry called on the Government to support this fragile recovery in confidence through its upcoming Budget.
“The upcoming Budget must strike a better balance between supporting business growth and addressing the public finances, something that was missing last year. That round of increased employment costs stalled a budding recovery in employer sentiment,” he said.
“Encouragingly, breakthroughs in international trade, stable inflation and a year of political stability are helping. The recently announced roadmap for the Employment Rights Bill is another positive step in terms of offering some certainty, but genuine, ongoing consultation with business ahead of the Bill’s Royal Assent and plans for the Budget is essential to sustain momentum.”
Regionally, London recorded the highest confidence levels in both permanent and temporary hiring forecasts. Among large businesses, defined as those with more than 250 employees, there was also a notable rise in optimism about staffing plans over the coming year.
