The UK's permanent hiring decline eased to its softest pace in three months in June 2026, while temporary billings grew at their fastest rate since April 2023, according to the latest KPMG and REC Report on Jobs. Read that as one signal, not many: employers aren't rushing back to permanent headcount, they're testing the water with flexible hiring first.
What the data actually shows
The picture from the July 2026 Report on Jobs, covering June data, is more nuanced than a straightforward recovery:
- Permanent placements fell at their slowest pace in three months, a meaningful easing rather than a reversal.
- Temp billings rose at the fastest rate since April 2023, the strongest single signal in the report.
- Starting pay for both permanent and temporary workers continued to climb.
- ONS earnings data shows total UK pay up 4.4% year on year to April 2026.
Separately, Wave's recruitment tracker recorded a 31% jump in placements in June and a 12% rise in applications, with market sentiment moving back to "improving" for the first time in months. Taken together, this isn't a market roaring back to life. It's a market cautiously testing demand through flexible hiring before committing to permanent headcount, which tracks closely with what REC and Redline Group's analysis both describe as employers favouring flexible strategies for the second half of 2026.
Why founders are choosing flexible first
This isn't employers losing confidence in growth. It's employers pricing in risk more carefully than they used to, and for good reason. Between rising National Insurance contributions, a new Fair Work Agency actively enforcing compliance, and an Employment Rights Act that's about to make early dismissals significantly costlier, permanent hiring now carries more downside than it did two years ago. Testing demand with flexible capacity before locking in a permanent contract isn't hesitation, it's a rational response to a genuinely different risk landscape.
For founders who've been sitting on a hiring decision, this data is useful in a specific way: it confirms the market is moving again, but it also confirms that "moving again" doesn't mean "back to the old playbook." The businesses making the smartest calls right now are the ones separating the question of capacity (do I need more hands on this now) from the question of permanent headcount (am I ready to carry that cost and risk long term), rather than treating them as the same decision.
What this means for your next hire
If you've been waiting for a clearer signal before hiring, this is close to one, but it's a signal to move deliberately, not quickly. A rolling, flexible arrangement lets you test genuine demand without locking into the two-year-turned-six-month unfair dismissal exposure discussed in our Employment Rights Act breakdown, while still giving you a dedicated person rather than a patchwork of freelancers. It's worth comparing that against what building capacity without adding headcount actually looks like in practice before you commit either way.
FAQ
Does this data mean UK hiring has fully recovered? No. Permanent hiring is stabilising, not growing. The strongest signal is temporary and flexible hiring, which typically leads a genuine recovery rather than confirming one has already happened.
Why are employers favouring temporary and flexible hiring over permanent roles? A combination of continued cost pressure, new compliance obligations under the Employment Rights Act, and general economic uncertainty is pushing employers to test demand before committing to permanent headcount.
Is now a good time to hire permanently? That depends entirely on your business. The data suggests confidence is returning, but the safest approach for most SMEs is to validate genuine, sustained demand with flexible capacity first.
What's driving the rise in starting salaries? Wage growth has been consistent through 2026, with ONS recording total earnings up 4.4% year on year to April, putting continued upward pressure on what employers need to offer to attract candidates.
Where can I read the full KPMG and REC report? It's published monthly and available directly from KPMG.
Sources
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