After several years in which positive news about the UK recruitment market has been frustratingly difficult to find, July's data provides something we haven't been able to say for some time: there are genuine reasons for optimism.
The latest KPMG and REC UK Report on Jobs, compiled by S&P Global, suggests the recruitment market may finally be beginning to turn a corner. It would be premature to declare a full recovery, but several important indicators are now moving in the right direction — and some significant milestones have been reached.
Perhaps the most striking is permanent recruitment. Permanent placements stabilised nationally in July, bringing an extraordinary 45-month period of decline to an end. At the same time, temporary billings increased for the fourth consecutive month, with growth remaining among the strongest recorded over the past three years.
That combination matters. Temporary and contract recruitment will often respond first when business confidence begins to return. Employers may not yet be ready to commit fully to permanent headcount, but they are increasingly prepared to bring people into their organisations to deliver projects and support growth.
There are encouraging signs on vacancies too. Overall demand for staff is still falling, but July recorded the slowest decline in vacancies for 22 months. More significantly, demand for temporary workers actually increased for the first time in two years, with private-sector temporary vacancies showing particularly solid growth.
London leads the recovery
If the national picture suggests the market is stabilising, London provides an indication of what a recovery might look like.
Permanent placements in the capital rose sharply in July, recording their fastest growth for almost four years, while temporary billings increased for a third consecutive month. Permanent vacancies have now been growing since April and temporary vacancies recorded their strongest increase for three-and-a-half years.
KPMG's Anna Purchas summed it up rather neatly: “businesses are back hiring.” She highlighted investment by financial services businesses alongside momentum within London's technology ecosystem, particularly around AI infrastructure.
London may be ahead of the curve, but historically the capital has often acted as a bellwether for the wider economy.
The South remains more cautious
The picture across the South of England — including Bristol — is more mixed. Permanent placements declined again in July, although temporary billings increased for the fourth consecutive month.
KPMG's Bristol Office Senior Partner David Williams described the region as showing “tentative signs of improvement”, with employers increasingly using temporary staff to progress projects while retaining flexibility around costs and economic uncertainty.
There are also continuing skills shortages. Despite relatively high candidate availability, employers are struggling to recruit in areas including hospitality, healthcare, cyber security and IT. The South report specifically identifies shortages across AI/ML, software development, engineering and security-cleared technology roles.
Pay is beginning to respond
Another potentially encouraging indicator is pay.
Nationally, starting salaries increased at their fastest rate for six months, while temporary wage inflation reached its highest level in more than two years. London was particularly strong, recording the fastest permanent salary growth of any English region and its highest rate for 16 months.
This is important because it suggests that, despite a larger pool of available candidates, businesses are still prepared to compete for the skills they genuinely need.
Cautious optimism — but optimism nonetheless
There are plenty of reasons not to get carried away. Candidate availability remains high, permanent vacancies are still contracting nationally and businesses continue to cite political uncertainty, employment costs and the wider economic outlook as reasons for caution.
But the direction of travel feels different.
Permanent placements are no longer falling. Temporary recruitment has been growing for four months. Temporary vacancies are increasing. Pay pressures are strengthening. London is hiring again.
After nearly four years of contraction in permanent placements, those are meaningful changes.
The REC describes “rays of light” beginning to break through the jobs market.
For recruiters, HR leaders and employers who have spent much of the past two years waiting for confidence to return, July's figures from KPMG, REC and S&P Global offer something increasingly valuable.
Not proof of a recovery just yet — but perhaps the clearest evidence so far that one may finally be beginning.
