UK Recruitment Market Snapshot — June 2026

Flexibility wins as employers put permanent hiring on hold

The latest recruitment and economic data suggests UK employers are becoming increasingly cautious.

Permanent hiring has weakened further, service sector activity has slipped into contraction, and construction output has fallen at its fastest pace for six years.

Yet despite this uncertainty, one area of the recruitment market continues to gain momentum: temporary and contract hiring.

The latest KPMG and REC UK Report on Jobs revealed that temporary billings grew at their fastest rate in more than three years during May, as employers increasingly turned to flexible workforce solutions amid economic uncertainty. This contrast between a weakening permanent market and strengthening temp demand is becoming one of the clearest themes in UK recruitment today.

MARKET SNAPSHOT: 5 Key Numbers

52.2

Temporary billings index (strongest growth in over three years)

44.1 

Permanent Placements Index (fastest decline in ten months)

45.9

Total Vacancies Index (demand for staff remains subdued)

52.7 

Services PMI (first contraction in service sector activity since April 2025)

39.7 

Construction PMI (fastest decline in construction activity for six years) 

Temporary hiring continues to outperform

The standout statistic this month is the Temporary Billings Index, which rose to 52.2 in May.

This represents the strongest growth in temp billings since April 2023 and marks the second consecutive month of expansion.

Recruitment consultancies reported that many employers are opting for temporary and contract workers as they seek greater flexibility in uncertain conditions.

While permanent recruitment often requires long-term confidence, temporary hiring allows businesses to access skills and capacity without making major long-term commitments.

This shift is becoming increasingly visible across the market.

Permanent recruitment remains under pressure

In contrast, permanent placements fell sharply again in May.

The Permanent Placements Index dropped to 44.1, representing the fastest decline since July 2025.

According to recruitment consultancies, employers continue to delay hiring decisions due to:

• Economic uncertainty
• Rising employment costs
• Inflationary pressures
• Geopolitical instability
• Lower business confidence

Permanent placements have now declined for 44 consecutive months.

For agencies operating solely in the permanent market, this creates an important strategic question:

Are clients asking for a different solution than they were 12 months ago?

Vacancies remain weak — but temp demand is stabilising

Overall vacancies continued to fall during May.

However, the detail tells a more nuanced story.

Permanent vacancies declined at their fastest pace for four months, while temporary vacancies recorded their slowest rate of decline in almost two years.

In other words:

Demand is still soft overall.

But demand for temporary workers is holding up considerably better than demand for permanent staff.

This supports the wider trend seen across billings and hiring activity.

Regional trends remain consistent

The strongest temporary billings growth continues to come from:

• South of England
• Midlands

All four monitored English regions recorded growth in temporary billings during May.

Meanwhile, permanent placements fell across most regions, with only the North recording a modest increase.

For agencies considering expansion into temporary recruitment, regional demand patterns remain an important indicator of opportunity.

Which sectors are driving demand?

The latest REC data shows that Blue Collar recruitment recorded the strongest increase in temporary vacancies during May.

This aligns with trends we’ve been seeing throughout 2026, where employers continue to prioritise operational and frontline resource.

Meanwhile, Nursing, Medical and Care remained the only sector to report higher demand for permanent staff.

The strongest opportunities therefore continue to be concentrated in:

• Healthcare
• Logistics
• Transport
• Industrial and Blue Collar recruitment

The wider economy remains cautious

The broader economic picture helps explain why employers are favouring flexibility.

The latest UK Services PMI fell below 50 for the first time in over a year, signalling a marginal contraction in activity. Businesses cited weaker demand, rising costs and increasing uncertainty around future trading conditions.

Construction remains under significant pressure, with output falling at its fastest rate since the pandemic and, excluding that period, the fastest pace since 2009.

Meanwhile, global manufacturing continues to grow, but much of that activity is being driven by businesses bringing orders forward due to concerns about future supply chain disruption and rising costs.

Across all sectors, one theme stands out:

Businesses still need people.

They are simply becoming more cautious about how they hire them.

What this means for recruitment agencies

The June data doesn’t point to a booming market.

But it does highlight a growing divide between permanent and temporary hiring.

Employers are increasingly choosing flexibility.

And that is creating opportunities for agencies that can support temporary and contract recruitment.

For perm-led agencies, the question is no longer whether temp demand exists.

The data clearly shows it does.

The question is whether they have the operational infrastructure, funding and support needed to take advantage of it.

As market conditions remain uncertain, flexibility isn’t just becoming more important for employers.

It’s becoming more important for recruitment agencies too.

Rik King, Director at QUBA Solutions, comments:

“The June data reinforces a trend we’ve been discussing with agencies for several months now. Clients still need people, but they’re becoming more selective about how they hire. Temporary recruitment is increasingly being used as a way to access skills and capacity without long-term commitment. For agencies, that creates a genuine opportunity. The challenge isn’t demand – it’s making sure they have the operational capability to respond when that demand arrives.”

Related insights

Thinking about how these market trends could impact your agency?

• How recruitment funding supports agency growth
• The benefits of recruitment funding: fast and flexible
• Temp funding through QUBA
• How do I fund my recruitment start-up?

• KPMG & REC UK Report on Jobs – June 2026
• S&P Global UK Construction PMI – June 2026
• J.P. Morgan Global Manufacturing PMI – June 2026
• S&P Global UK Services PMI – June 2026