UK Recruitment Market Snapshot — July 2026
Employers are still hiring – they’re just changing how they hire
If there was one message running through this month’s recruitment and economic data, it’s this: Businesses haven’t stopped hiring. They’re becoming more selective about how they do it.
Across four of the UK’s most closely watched economic reports, a consistent picture is emerging. Employers continue to face economic uncertainty, rising costs and cautious business confidence, yet demand for flexible staffing solutions remains resilient.
For recruitment agencies, that means opportunity still exists but it’s increasingly centred around temporary and contract recruitment.
MARKET SNAPSHOT: 5 Key Numbers
52.7
Temporary Billings Index: Highest reading since April 2023
49.1
Permanent Placements Index: Decline eases to its slowest pace in three months
45.1
Vacancies Index: Overall demand remains subdued
48.8
UK Services PMI: Weakest performance since January 2023
38.4
UK Construction PMI: Activity still contracting despite slight improvement
Temporary hiring continues to lead the market
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
There is encouraging news for permanent recruiters too. Although permanent placements continued to decline in June, the rate of contraction eased noticeably and was the softest recorded since March.
Many recruiters reported that clients were beginning to progress projects that had previously been delayed, while some employers resumed recruitment activity as confidence improved slightly.
The permanent market isn’t back to growth. But the pace of decline is becoming less severe. That suggests businesses are beginning to regain confidence, even if they’re not yet ready to commit to large-scale permanent hiring.
Vacancies remain subdued but the picture isn’t the same everywhere
Overall demand for staff continues to weaken, with vacancies falling for the 32nd consecutive month. However, the detail reveals an important distinction.
Permanent vacancies fell at a sharper pace during June, while temporary vacancies declined only marginally. In fact, demand for temporary workers in the private sector improved slightly.
That tells us employers are still recruiting, they’re simply adjusting their hiring strategies.
Healthcare, engineering and blue-collar sectors continue to perform
Sector trends also remain consistent. Healthcare (Nursing, Medical and Care) and Engineering were the only sectors to record growth in permanent vacancies. On the temporary side, Blue Collar recruitment posted the strongest increase in demand, with Engineering also performing well.
These sectors continue to demonstrate resilience despite wider economic pressures.
The wider economy remains cautious
Outside recruitment, economic conditions continue to explain why employers are favouring flexibility.
The UK Services PMI fell to 48.8 in June, marking its weakest performance since January 2023. Activity declined for a second consecutive month as businesses cited subdued demand, geopolitical uncertainty and cautious client spending.
Construction remains under significant pressure, although June brought modest improvement compared with May. New orders continued to fall and activity remains well below long-term averages, but business optimism reached its highest level since March.
Globally, manufacturing continues to expand, but momentum is beginning to soften. Growth in output and new orders slowed during June, while business optimism fell to an eight-month low. Although this is a global indicator, it reflects the cautious backdrop influencing UK exporters and manufacturers.
What this means for recruitment agencies
The July data reinforces a trend we’ve been watching develop throughout 2026. Employers still need people. They’re simply becoming more selective about when, where and how they hire.
Temporary recruitment continues to provide businesses with the flexibility they need to respond to changing market conditions without committing to long-term costs.
For agencies, that presents an opportunity. Whether you’re already operating in the temporary market or considering expanding your offering, the latest data suggests that flexibility remains one of the strongest drivers of recruitment demand.
Insight from Ashley Lyas, Director at QUBA Solutions:
“The latest data tells us that demand hasn’t disappeared, it’s simply evolved. Businesses are still investing in people but they’re looking for flexibility while economic conditions remain uncertain which is understandable. That’s creating real opportunities for agencies that can support temporary and contract recruitment. The market isn’t standing still and agencies that adapt to changing client needs will be in the strongest position as confidence continues to recover.”
What does this mean for your agency?
If you’re seeing similar trends in your own business or you’re considering expanding into temporary recruitment – we’d be happy to talk through what we’re seeing across the wider market.
Whether you’re looking to improve cash flow, explore recruitment funding or understand what’s involved in moving into temp recruitment, our team is here to help. Get in touch to discuss your agency’s growth plans.
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Important: This information is for educational purposes based on information correct on 08 July 2026.
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