UK Temp Billings Hit Three-Year High as Permanent Market Edges Toward Stabilisation
The News
The latest KPMG and REC UK Report on Jobs, compiled by S&P Global from a panel of around 400 recruitment consultancies, shows temporary billings rising at the steepest rate since April 2023. The Temporary Billings Index registered 52.7, firmly in expansion territory. Permanent placements continued to decline (index 49.1) but at the softest pace in three months, suggesting the permanent market may be approaching stabilisation.
Overall demand for staff weakened further, with vacancies falling for the 32nd consecutive month and total staff demand declining at the quickest rate since January. The contraction was driven primarily by a steeper drop in permanent vacancies. However, starting pay growth strengthened to its highest level since January, as employers competed for candidates with scarce skills.
Healthcare and Engineering were the only monitored sectors to register growth in permanent vacancies. On the temp side, Blue Collar roles posted the strongest increase in demand. Retail saw the sharpest reduction in permanent vacancies. Lisa Fernihough of KPMG UK linked the pivot to temporary hiring to ongoing geopolitical uncertainty, noting that CEOs "have been able to progress shorter term projects and investments without longer term commitments."
Why It Matters
For TA leaders, this data confirms a structural shift rather than a cyclical wobble. Three consecutive months of accelerating temp billings alongside declining permanent placements is not a blip — it's employers voting with their budgets. The implication for workforce planning is significant: if your hiring plan for H2 is built around permanent headcount additions, you may be out of step with what your business is actually willing to approve.
The pay growth signal is equally important. Starting salaries are rising even as overall demand weakens, which means the competition for specific skills is intensifying even in a contracting market. TA leaders in healthcare and engineering are operating in a fundamentally different environment from those in retail or construction. A single hiring strategy across business units will misallocate resources in both directions.
Taking Action
All action is situated in your corporate context. These are starting points, not prescriptions — choose what fits.
Connect
Who to talk with in your enterprise
Your head of workforce planning or FP&A partner — compare your H2 hiring plan's permanent-to-temporary ratio against what the KPMG/REC data suggests about market behaviour. If your plan is heavily weighted to permanent hires but the business is signalling preference for flexibility, you're building a pipeline that may not get funded. Have the conversation now, not in Q4.
Your head of contingent workforce or MSP programme manager — the temp billings surge means your agency partners are busy. Review your framework agreements and rate cards to ensure they reflect current market conditions. If temp demand is accelerating, your suppliers' capacity may become constrained, particularly in healthcare and blue-collar roles.
Inspect
What to take a closer look at
Pull your own data on permanent versus temporary hiring for the last six months and compare the trend against the KPMG/REC indices. Specifically: (1) what percentage of your hires have been permanent vs. temporary/contract in each of the last six months? (2) Has your average time-to-fill for permanent roles increased even as temp fill rates have improved? (3) Are your starting salary offers tracking above or below the market rate of growth? If you can't answer (3), your compensation benchmarking may be stale — and in a market where pay growth is accelerating for scarce skills, that's costly.
Reflect
What to think about more deeply
The data tells a story of employers who "haven't stopped hiring — they're just changing how they hire." But is the pivot to temporary work a rational response to uncertainty, or is it a self-fulfilling prophecy? If every employer delays permanent commitments because they're uncertain, and the resulting temp-heavy labour market reduces consumer confidence and business investment, the uncertainty deepens. At what point does hedging become the risk itself?