UK permanent hiring stopped shrinking in August for the first time since September 2022, and the sector doing the work of holding the labour market together is temporary staffing, not permanent headcount.

The KPMG and REC UK Report on Jobs for August, compiled by S&P Global, found permanent placements rose after 45 straight months of decline. The increase was described as marginal, but recruiters called it a genuine turning point after nearly four years of employers keeping permanent hiring “on the standby button,” in the words of Maxine Bligh, interim chief executive of the Recruitment and Employment Confederation. Temporary staff billings grew for a fifth consecutive month, at the second-quickest pace in three years, as employers leaned on contract labour rather than commit to permanent roles. Overall demand for staff still fell, for the 34th month running, and permanent vacancies kept declining at a pace unchanged from July.

The recovery is geographically lopsided. Permanent placements rose in London and the Midlands but kept falling in the north and south of England, while temp billings grew fastest in the north. Starting salaries for both permanent and temporary roles grew at their fastest pace in months, a sign that employers are still paying premiums for scarce, specialised skills even as overall headcount stays flat.

The original insight for HR leaders is in the sequencing, not the headline. Temp billings have now outpaced permanent hiring for months, which means workforce planning teams reading this as “hiring is back” are misreading it. What actually recovered first is contingent capacity, and US payroll data from the same week shows a similarly uneven pattern, employers adding headcount cautiously while keeping flexible labour as the shock absorber. It also lines up with the pattern in last week’s US data showing job cuts and hiring plans rising together. Any HR tech vendor pitching workforce forecasting tools this quarter should expect buyers who want temp-to-perm conversion modeling, not simple headcount forecasts, because that is the behavior the data is actually showing.

Source: KPMG UK