UK Recruitment Market Snapshot — August 2026

Temp demand rises as permanent recruitment finally stabilises

There are some genuine signs of improvement in the UK recruitment market this month.

Our August snapshot brings together the latest findings from four major market reports – the KPMG and REC UK Report on Jobs, S&P Global UK Services PMI®, S&P Global UK Construction PMI® and J.P. Morgan Global Manufacturing PMI® – to give recruitment agencies one straightforward view of what’s happening across the market.

And this month, there’s a notable shift.

After 45 consecutive months of decline, permanent placements stabilised in July. At the same time, temporary billings increased for a fourth successive month and, perhaps more significantly, demand for temporary workers rose for the first time in two years.

That doesn’t mean the recruitment market is suddenly booming. Employers remain cautious, candidate availability is high and some important areas of the economy are still reducing headcount.

But the direction of travel is becoming more positive – and once again, temporary recruitment is leading the way.

MARKET SNAPSHOT: 5 Key Numbers

52.7

Temporary Billings Index: Temp billings increased for the fourth consecutive month, with growth remaining among the strongest recorded since early 2023. 

50

Permanent Placements Index: Permanent placements stabilised in July, bringing an end to a 45-month period of decline.

52.2

Temporary Vacancies Index: Demand for temporary workers increased for the first time in two years.

52.1

UK Services PMI: The UK’s dominant service sector returned to growth in July, up sharply from 48.8 in June.

44.7

UK Construction PMI: Construction remained in contraction, but improved substantially from 38.4 in June, marking its slowest downturn since March. 

Temporary recruitment: demand is now moving as well as billings

The strongest signal this month comes once again from the temporary recruitment market. The latest KPMG and REC UK Report on Jobs shows temporary billings increased at the fastest rate seen in more than three years. Recruiters reported that businesses are continuing to favour temporary workers and short-term projects as a way of managing uncertainty while maintaining access to skills. 

This isn’t simply a short-term trend. For three consecutive months we’ve seen evidence that employers are choosing flexibility over long-term commitments. 

That creates an opportunity for agencies that can respond quickly to changing client requirements. 

Permanent recruitment shows signs of stabilising 

Temporary recruitment has been one of the more encouraging parts of the market for several months, but July’s figures make the story stronger.

Temp billings rose for the fourth consecutive month. Although growth eased from June’s 38-month high, it remained among the strongest recorded since early 2023.

Recruiters linked the increase to new project starts, stronger demand for short-term staff and employers choosing more flexible workforce arrangements while uncertainty persists.

Crucially, this isn’t only a billings story anymore.

Temporary vacancies increased for the first time in two years

The Temporary Vacancies Index reached 52.2, with private-sector temporary demand at an even stronger 53.0. By comparison, permanent vacancies continued to decline, although at their slowest rate in 22 months.

For recruitment businesses, that’s an important distinction.

It suggests employers aren’t simply maintaining existing temporary workforces. Fresh demand for flexible resource is beginning to emerge.

For perm-led agencies, that should be worth watching closely. If clients increasingly want temporary or contract solutions alongside permanent hiring, being able to offer both could create an opportunity to capture demand that might otherwise go elsewhere.

Where is temp demand strongest?

The sector data gives recruiters an even clearer picture.

Temporary vacancies increased across seven of the ten employment sectors monitored by the KPMG and REC report in July.

Blue Collar recorded the strongest growth, followed by Engineering. Temporary demand also increased in Accounting & Financial, Nursing/Medical/Care, IT & Computing, Secretarial/Clerical and Executive/Professional.

Retail saw the sharpest reduction in temporary vacancies.

There’s also a clear public/private divide.

Demand for temporary workers increased solidly in the private sector, while the public sector recorded only a slight reduction.

For recruiters considering where to focus business development activity, those differences matter. The overall market may still be cautious, but the opportunity isn’t evenly distributed.

Permanent recruitment: has the market finally reached the bottom?

Possibly – although it’s too early to call it a recovery.

The Permanent Placements Index reached exactly 50.0 in July, meaning placements were unchanged from the previous month.

On its own, flat growth doesn’t sound particularly exciting.

In context, it’s significant.

It ended 45 months of falling permanent placements – the longest period of contraction recorded by the survey.

There were also substantial regional differences.

London recorded a strong rebound in permanent hiring, with growth reaching a near four-year high, while the Midlands also returned to growth. Permanent placements continued to fall in the South and North of England.

Permanent vacancies are still declining, so this isn’t evidence of a full recovery yet. But the rate of decline was the weakest in 22 months.

The picture therefore looks less like “perm is back” and more like “the deterioration may finally be levelling out.”

For agencies with exposure to both perm and temp, that creates an interesting market: early signs of stabilisation in permanent recruitment alongside clearer growth in temporary demand.

Candidate availability remains high – but the pace is easing

Recruiters still have access to a significantly larger candidate pool.

Overall staff availability rose for the 41st consecutive month in July, with the Staff Availability Index at 59.8.

However, the rate of increase was the weakest since February. Both permanent and temporary candidate availability continued to rise, but more slowly.

The reasons behind the increase remain less positive: recruiters continued to cite redundancies, concerns over job security and a lack of available opportunities.

But there is an interesting tension emerging.

Candidate supply remains high while temporary vacancies are beginning to increase – and recruiters are reporting shortages of suitably skilled and experienced candidates for some roles.

That’s contributing to stronger pay pressure. Permanent starting salary growth reached a six-month high, while temporary wage growth was the strongest for 26 months.

For agencies, a bigger candidate pool therefore doesn’t necessarily mean the right skills are easy to find.

Services return to growth – but businesses are still cautious on headcount

The wider economic picture also improved in July.

The S&P Global UK Services PMI Business Activity Index climbed from 48.8 in June to 52.1 in July, taking the sector back into growth for the first time in three months.

New business also increased for the first time since February, while business confidence reached its strongest level for five months.

Technology was a particular bright spot. Computing & IT services recorded another sharp expansion, with growth accelerating to its fastest since February alongside robust new orders.

But employers haven’t responded by significantly increasing their permanent workforces.

Service-sector employment fell for the 22nd consecutive month, although the rate of job losses was the weakest since October 2025. Cost reduction, non-replacement of leavers and investment in AI and productivity were all cited as factors.

That’s an important signal for recruiters.

Business activity can recover before permanent headcount does.

And that gap between improving workloads and continued caution around fixed employment costs could help explain why flexible hiring is currently proving more attractive. 

Construction: still contracting, but the direction is improving

Construction remains one of the weaker parts of the UK economy, but July delivered some encouraging movement.

The S&P Global UK Construction PMI rose sharply from 38.4 to 44.7.

That’s still below the 50.0 threshold separating growth from contraction, but it represented the slowest decline in output since March.

All three major construction categories remained in contraction, although each improved:

• Commercial: 46.8
• Housebuilding: 41.8
• Civil engineering: 38.3

New business also declined at its slowest rate for ten months, with some businesses reporting improving tender opportunities across commercial development, residential projects and transport infrastructure.

Employment continued to fall, but here too the rate of decline eased. Construction job losses were the weakest for five months, while expectations for activity over the next year reached their highest level since February.

For recruiters operating in construction and engineering, it’s therefore still a difficult market – but one showing more signs of stabilisation than it did earlier in the year.

Manufacturing adds another positive UK signal

The fourth report in our snapshot – the J.P. Morgan Global Manufacturing PMI – is global rather than UK-specific, so we’ve been careful not to apply worldwide findings directly to the UK recruitment market.

Globally, manufacturing remained in expansion in July, with the headline PMI at 52.1 and employment recording its strongest increase in more than two years.

More relevant to this UK snapshot is the UK evidence contained within the wider PMI data.

The S&P Global UK Composite PMI reported that UK manufacturing production increased to its greatest extent since September 2024 during July. Combined with renewed services growth, this helped push overall UK private-sector output back into expansion, with the Composite Output Index rising from 49.3 to 52.2.

That provides another indication that business conditions are beginning to improve – even if employment has yet to follow at the same pace.

What does this mean for recruitment agencies?

July’s data doesn’t point to a recruitment boom.

But it does contain more positive signals than we’ve seen for some time.

Permanent recruitment has stopped falling. Temporary billings are growing. Temporary vacancies have finally moved into growth. Services have returned to expansion. Construction’s downturn is easing. And UK manufacturing output has strengthened.

The common thread is still caution.

Employers appear more willing to move ahead with projects and respond to improving demand, but many remain reluctant to add permanent headcount quickly.

That creates a market in which flexibility has real value.

For established temp agencies, the latest figures provide further evidence that demand is moving in the right direction.

For perm-only agencies, they raise a different question:

If your clients increasingly want temporary and contract workers, are you in a position to provide them?

Moving into temporary recruitment does bring additional considerations – from payroll and credit control to funding workers before clients settle their invoices. That’s where having the right recruitment funding or invoice finance structure can become important.

But those operational challenges shouldn’t necessarily be a reason to sit out a growing part of the market.

“This month’s figures feel like an important shift. After such a prolonged downturn, seeing permanent placements finally stabilise is encouraging but the bigger opportunity for recruiters remains temp. Billings have now grown for four months and, importantly, temporary vacancies are increasing too. Employers are clearly looking for flexibility as they start to move forward again. For perm-led agencies, I’d be asking whether your clients are already creating a temp opportunity and whether you’re ready to capture it before someone else does.”

Rik King, Director at QUBA Solutions

The QUBA view

We’re not calling a full market recovery just yet.

But there are more green shoots appearing.

The recruitment market is beginning to look less like one in continuous decline and more like one moving through stabilisation towards selective growth.

Temporary recruitment is currently at the front of that movement.

For agencies, that makes it worth looking beyond the headline numbers. Which clients are beginning to invest again? Where are projects restarting? Which sectors need skills quickly? And where could employers favour flexible resource before committing to permanent headcount?

Those conversations could reveal opportunities before a broader recruitment recovery becomes obvious.

Considering adding temp or contract recruitment?

If you’re seeing more clients asking for temporary or contract workers but funding, payroll, credit control or back-office administration is holding you back, QUBA can help.

We provide the funding and operational support recruitment agencies need to place workers and grow without waiting for clients to pay.

Talk to QUBA about making the move into temporary recruitment.

Explore more

Want to understand how funding can support your recruitment business?

• What is invoice finance and how does it work? 
• Recruitment funding for temporary and contract agencies
• How do I fund my recruitment start-up? 
• Factoring vs discounting – which is right for your agency? 
• Permanent recruitment funding

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