Britain’s jobs market downturn eases as temporary hiring rises

Temporary hiring picked up at the fastest pace since April 2023 in June, easing the downturn in Britain’s jobs market even as permanent recruitment stayed under pressure. The KPMG and Recruitment and Employment Confederation survey found that permanent staff appointments fell only marginally, the softest decline in three months, while starting pay and wages rose at their strongest rate since January.

The mixed picture matters because it shows employers are not switching hiring off, but they are still avoiding long-term commitments. The monthly Report on Jobs, compiled by S&P Global from about 400 UK recruitment and employment consultancies, showed overall demand for staff weakening at the fastest pace in five months. Vacancies also fell at the quickest rate since January, driven by a sharper drop in permanent roles, while candidate availability kept rising as redundancies and weaker hiring activity pushed more people back into the market.

That combination points to a labor market that is cooling rather than collapsing. Recruiters said subdued business confidence and wider uncertainty were steering employers toward short-term staff and project work, with temporary billings rising sharply as firms looked for flexibility. KPMG said geopolitical uncertainty at home and overseas continued to shape hiring trends in June, while the REC said employers were prioritising flexible staffing solutions to complete projects and support business development.

Pay is the other half of the story. The survey said starting salaries and wages strengthened for both permanent and temporary workers, with pay trends at their strongest since January 2026, although still below long-run historical averages. That pickup in pay will be watched closely by the Bank of England, because wage growth feeds directly into domestic inflation pressure and the pace at which policy makers can ease rates.

The Bank’s Monetary Policy Committee voted 7-2 on June 17 to keep Bank Rate at 3.75%, saying the labour market continued to loosen even as consumer price inflation remained elevated at 2.8% and energy-price shocks still posed a risk. Softer hiring helps reduce wage pressure over time, but June’s report showed that the labor market is still generating pockets of pay strength, especially where employers are using short-term contracts to fill gaps.

Official data underline the slowdown. The Office for National Statistics said payrolled employees fell by 119,000 year on year to 30.3 million in May 2026, while the UK employment rate for people aged 16 to 64 stood at 75.0% in the February-to-April period. Together, the survey and the official figures suggest Britain’s jobs market is losing heat, but not yet losing its grip on wages or household finances.