The latest KPMG and REC UK Report on Jobs points to a labour market that is steadying after a prolonged period of subdued hiring. While permanent recruitment remains under pressure, June’s data shows the pace of decline easing significantly, alongside a marked acceleration in temporary and contract hiring.
Temporary hiring leads the way
Temporary billings grew at their fastest rate since April 2023 in June, with recruiters citing a clear shift towards flexible staffing solutions. Businesses facing ongoing economic uncertainty are increasingly turning to short-term contracts and project-based hires rather than committing to permanent headcount, allowing them to progress work without longer-term financial exposure.
This shift was reflected across all four monitored regions of England, with the South of England recording the strongest increase in temporary billings.
Permanent placements stabilising
Permanent placements continued to fall in June — the forty-fifth consecutive month of decline — but the rate of contraction was the softest recorded since March. Recruiters linked ongoing falls to reduced vacancies and tighter recruitment budgets, both symptomatic of cautious business confidence. However, where placements did increase, this was often attributed to renewed client activity and businesses pressing ahead with previously paused projects.
London, the South of England and the Midlands all recorded softer declines compared to May, suggesting the worst of the permanent hiring slowdown may be behind us. The North of England was the exception, returning to decline after four months of growth.
Pay growth accelerates
Starting salaries for permanent staff and hourly rates for temporary workers both grew at their fastest pace since January. Employers report having to raise pay offers to secure skilled candidates, even as overall demand for staff continues to soften — a sign that competition for the right talent remains fierce despite the wider slowdown.
Growth, while solid, still sits below the long-run average recorded since the survey began nearly 30 years ago.
Vacancies and candidate supply
Total demand for staff fell at its quickest rate since January, driven predominantly by a steeper drop in permanent vacancies. Candidate availability continued to rise for the fortieth consecutive month, though growth in the pool of available talent slowed to a four-month low. Recruiters attributed the rise in candidate numbers largely to redundancies and reduced hiring activity, though some also noted growing hesitancy among candidates to seek new roles amid the current climate.
Where demand remains strong
Even with the wider slowdown, structural skills shortages haven’t gone away. Recruiters continue to report shortages across nursing, medical and care roles, engineering, accounting and finance, IT and cyber security, and skilled trades and construction — a reminder that for the right skill sets, the market remains genuinely competitive.
Scotland’s market: a mixed but encouraging picture
Closer to home, Scotland’s monthly figures were softer in June — permanent placements fell for a second consecutive month at the steepest rate since November, while temporary billings also declined for the fourth time in five months.
However, the wider picture is more encouraging. REC’s Labour Market Tracker shows Scotland is one of the regions actually driving growth in UK job postings right now, even as activity in London contracts. Scottish recruiters also reported the sharpest rise in permanent candidate availability in three months, giving employers a strong and growing pool of talent to hire from.
In short: a softer month, but genuine underlying momentum.
What this means for employers and candidates
The overall picture is one of cautious resilience rather than retreat. Employers are recalibrating rather than pulling back from hiring altogether — prioritising flexibility, focusing recruitment on critical roles, and pacing investment decisions carefully as they wait for greater economic certainty.
For businesses, this is a market that rewards adaptability: those able to offer flexible workforce solutions and respond quickly to skills shortages are best placed to take advantage of steady underlying demand. For candidates, rising pay and sustained vacancy activity in key sectors mean genuine opportunities remain, even if the market feels more competitive than in previous years.
Whether you’re planning your next hire or considering your next career move, our team can help you navigate what these trends mean in practice.
Get in touch:
📞 0141 348 7777
📧 applications@andersonknight.co.uk
🌐 www.andersonknight.co.uk
Source: KPMG and REC, UK Report on Jobs, June 2026. Data collected 11–24 June 2026 from a panel of around 400 UK recruitment and employment consultancies.
