UK Recruitment Market Snapshot — May 2026

Temporary hiring gains momentum as employers prioritise flexibility 

The latest recruitment and economic data shows a slightly different picture to the cautious stabilisation we saw earlier this year. 

The UK recruitment market is still far from a full recovery, but one area is beginning to stand out more clearly: temporary and contract hiring. 

Across the latest reports from S&P Global and KPMG/REC, employers are increasingly leaning towards flexible workforce models as they navigate ongoing economic uncertainty, rising costs and slower decision-making. 

For recruiters, that matters. 

Because while permanent hiring remains subdued, the temp market is showing signs of genuine movement, and agencies that can support contract and temporary hiring are increasingly well-positioned. 

MARKET SNAPSHOT: 5 Key Numbers

50.4

Temporary billings index (strongest growth in 2.5 years) 

47.5 

Temporary billings index (perm hiring still declining) 

46.2 

Vacancies index (vacancy declines easing gradually) 

52.7 

UK Services PMI (service sector still expanding) 

39.7 

Construction PMI (construction activity remains weak) 

Temporary hiring is becoming the safer option for employers 

One of the clearest themes running through this month’s data is caution. 

Businesses are still hiring but many are avoiding long-term commitments where possible. 

That’s helping drive stronger demand for temporary and contract workers, with April’s temp billings growth reaching its strongest level in two-and-a-half years. 

Neil Carberry, REC Chief Executive, summarised it clearly: 

“The good news is that employers are leaning more on temporary work to move ahead with their plans in this more uncertain time.” 

For recruiters, this is important. 

We’re seeing more agencies that have historically focused on permanent recruitment starting to explore temp and contract markets – not just because of market pressure, but because clients increasingly want flexibility, speed and lower long-term risk. 

And if agencies don’t move with that shift, competitors likely will. g as agencies look to maintain momentum despite slower deal cycles.

Permanent hiring remains cautious 

Permanent placements continue to decline nationally, with the latest index falling to 47.5 in April. 

That said, the picture is more nuanced than earlier in the year. 

The pace of decline remains softer than much of 2025, suggesting the market is no longer deteriorating rapidly, but confidence still isn’t strong enough to drive widespread permanent expansion. 

Businesses are continuing to delay hiring decisions due to: 

• Economic uncertainty 

• Rising operational costs 

• Inflationary pressures 

• Concerns around borrowing costs 

• Global geopolitical instability 

This is creating longer sales cycles and slower conversion timelines across recruitment. 

For agencies, that often means: 

• Less predictable pipelines 

• Longer cash conversion cycles 

• Greater operational pressure between placement and payment 

Which is why many recruiters are reassessing how they manage cash flow, operational visibility and funding support, particularly through solutions such as invoice finance and invoice funding.

Regional trends: South and Midlands outperforming 

The latest KPMG/REC data also highlights notable regional differences. 

Temporary billings performed particularly strongly across: 

• The South of England 

• The Midlands 

Meanwhile, London and the North recorded softer conditions during April. 

That regional variation matters for agencies assessing where demand is building fastest, especially those considering expansion into temporary recruitment markets. 

Which sectors are showing the most demand? 

The strongest temporary demand is currently coming from: 

• Nursing, Medical & Care 

• Blue Collar sectors (including logistics and transport) 

Meanwhile, Engineering remains one of the more resilient permanent recruitment sectors. 

Private sector demand is also holding up better than public sector hiring, particularly for temporary workers. 

This reflects a broader market trend: Businesses still need resource and operational capacity – they’re simply becoming more cautious about how they access it. 

The wider UK economy is still mixed 

Outside recruitment itself, the broader UK economy continues to send mixed signals. 

The UK services sector remains in growth territory, with the Services PMI rising to 52.7 in April. 

However, demand remains fragile, and businesses are continuing to report: 

• Higher fuel costs 

• Supply chain disruption 

• Increased wage pressure 

• Delayed client decisions 

At the same time, construction activity weakened sharply, with the Construction PMI falling to 39.7, signalling the steepest decline in output since November 2025. 

Manufacturing globally continues to grow, but rising costs and supply chain pressures remain a concern for businesses internationally. 

In short: The market is still operating in a cautious environment but flexibility is increasingly winning.

What this means for recruitment agencies 

The recruitment market isn’t booming. But it is evolving. 

And one of the clearest changes right now is the increased importance of temporary and contract hiring within client workforce strategies. 

For agencies considering a move into temp: 

• Cash flow concerns 

• Operational complexity 

• Funding risk 

• Payroll management 

can often feel like major barriers. 

But increasingly, recruiters are looking at ways to remove those operational constraints through specialist recruitment funding support, invoice financing and outsourced back-office solutions. 

Because in a market where clients want flexibility, agencies need operational flexibility too. the right financial structure, whether through retained earnings or tools like invoice financing, can be the difference between standing still and continuing to grow.

Insight from Jenny Underhay, Head of Sales at QUBA Solutions:

“Our latest insight reflects what market reports are now confirming – flexibility is driving employer demand for temporary solutions. That’s led many strong perm-led businesses to explore temp and while cash flow and operational risk can feel like blockers, QUBA handles funding, risk and back-office so agencies can move into the contract market without constraint.”

Related insights

Explore more: 

• Traditional Invoice Finance Alternatives  
• The benefits of recruitment funding – fast and flexible  
• Benefits of permanent recruitment funding  
• How do I fund my recruitment start-up?  
• Scary truths about traditional funding  
• What is the cost of starting a recruitment business? 

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