KPMG and the Recruitment & Employment Confederation have reported the strongest rise in temporary billings for more than three years, as companies continue to favour short-term staffing over permanent recruitment.
The latest UK Report on Jobs, compiled by S&P Global from responses from around 400 recruitment and employment consultancies, found that temporary billings rose at the quickest rate since April 2023 in June. Permanent staff appointments continued to fall, although the decline eased notably and was the softest for three months.
Subdued business confidence was the main driver behind the preference for short-term workers, with companies using temporary hiring to progress projects while avoiding longer-term commitments. Overall demand for staff weakened more quickly, largely because of a steeper fall in permanent vacancies.
Candidate availability continued to rise sharply, with redundancies again cited as a factor. Even with more people looking for work, starting salaries and temporary wages rose at quicker rates, reflecting continued competition for candidates with specific skills.
The data, collected between 11 and 24 June, places the labour market in a cautious middle ground. Permanent hiring has not recovered, yet employers are still bringing in workers where projects, seasonal demand, or immediate operational needs require additional capacity.
Lisa Fernihough, Vice Chair 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. With oil prices steadying, business leaders will be hoping that the coming months bring a period of stability and improved economic conditions where they can start to build momentum again.”
Neil Carberry, REC Chief Executive, 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. Though that too looks like it may change. 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.
“It’s time to back business and work in partnership, not hand down costs and regulation from on high. That’s what contributed to unworkable proposals on guaranteed hours and a National Insurance bill that has driven youth unemployment up. It’s time to change that.”
The sector breakdown shows how uneven demand has become. Nursing, medical, care, and engineering were the only monitored categories to record improved demand for permanent staff in June. Retail recorded the sharpest reduction in permanent vacancies. Temporary vacancies rose sharply in blue-collar roles and solidly in engineering, while several other categories recorded falls.
The latest figures deepen a pattern already visible in recent labour-market data showing permanent hiring falling as temporary work rises. Employers are not withdrawing from recruitment altogether; they are choosing narrower, more flexible routes into labour while confidence remains fragile.
Short-term hiring reflects the way companies are absorbing overlapping pressures. Higher employment costs, weak demand in parts of the consumer economy, uncertainty over energy prices, geopolitical disruption, and changing workforce regulation have made permanent headcount decisions harder to justify.
Permanent recruitment adds fixed cost at a time when many companies are still protecting cash, managing margin pressure, and trying to preserve flexibility. Temporary and contract hiring allows projects to continue, but repeated reliance on short-term labour can also create capability gaps if companies defer too much investment in permanent teams.
The pay figures complicate the picture. Rising candidate availability would usually ease salary pressure, but specialist skills remain scarce enough to lift starting pay. The result is a two-tier labour market: more people available overall, yet continued competition for technical, engineering, care, finance, digital, and other hard-to-fill roles.
Employers face a second tension in how temporary hiring affects organisational resilience. Short-term labour can keep work moving, although it may weaken knowledge retention, continuity, training, and team culture if it becomes a long-running substitute for permanent capacity. Where temporary roles become embedded, costs can also rise beyond initial expectations.
The data also sits alongside wider employment-law and compliance changes. Reforms around zero hours arrangements, strengthened right-to-work obligations, and pressure for greater predictability in variable work all point to a labour market where flexibility is still valued, but no longer as administratively simple as it once appeared.
June’s figures suggest companies are waiting for clearer economic and policy signals before committing to larger permanent hiring plans. That cautious approach may protect balance sheets in the short term, but it leaves productivity, skills development, and permanent workforce planning exposed if confidence takes longer to recover.
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