Jo Thompson Recruitment contributes to the Report on Jobs, a comprehensive guide on the UK labour market drafted by KPMG and the Recruitment & Employment Confederation (REC), compiled by S&P Global. This monthly report is built upon survey data from recruitment consultancies and employers, providing valuable insights into the latest labour market trends.
August’s data points to a more constructive labour market, with permanent placements increasing nationally for the first time since September 2022 and temporary recruitment continuing to grow strongly. At the same time, candidate availability remains elevated and vacancies continue to fall, meaning the recovery is still tentative and uneven.
Commenting on the latest survey results, Jon Holt, Group Chief Executive and UK Senior Partner at KPMG, said:
“Confidence is beginning to return to the market. Businesses have learned to adapt to constant global uncertainty, building greater resilience into their strategies. Since the spring, employers have favoured flexible temporary hires to support their investment plans, but permanent placements have also now risen for the first time in almost four years.
“This is clearly encouraging after such a prolonged downturn in hiring, but the jobs market continues to contract overall. Vacancies are still falling, the number of people looking for work continues to rise, and some employers are keeping the brakes on recruitment because of continued geopolitical uncertainty and elevated borrowing costs.
“With the Budget next month, the Government has the opportunity to turn these green shoots into sustained positive momentum. A clear and credible plan for growth would give businesses greater certainty over the outlook and help unlock stronger demand across the jobs market.”
Maxine Bligh, Interim Chief Executive at the Recruitment and Employment Confederation (REC), said:
“The job market is starting to power up again after employers had permanent hiring on the standby button for the past four years. It is encouraging that temporary recruitment is now complementing rather than replacing permanent hiring. Now we need to see this confidence to hire widen out across the country and more sectors of the economy.”
“Government, business and trade unions must act to shore up this fragile momentum in the job market. This is not the time to take the job market for granted. Instead, government should follow through on its commitment to lessen burdens on business. This means greater pragmatism on the employment rights agenda, including lessening the gamble the government is taking with its guaranteed hours policy. It also means delivering an Autumn Budget that demonstrates the government is serious about backing business and provides employers with the confidence they need to hire, invest and grow.”
Executive Summary
The Report on Jobs is unique in providing the most comprehensive guide to the UK labour market, drawing on original survey data provided by recruitment consultancies and employers to provide the first indication each month of labour market trends.
The main findings for August are:
Recruiters signal fresh rise in permanent staff appointments while temp billings expand solidly
Permanent staff appointments across the UK rose for the first time since September 2022 in August. The uptick was often linked to an improvement in market confidence and companies efforts to expand capacity. However, uncertainty regarding the economic outlook and government policy reportedly dampened the rate of expansion, which was marginal overall. Temp billings meanwhile rose at a stronger pace that was the second-quickest in over three years, driven by a preference for short-term staff and greater amounts of contract work.
Solid growth in starting salaries and temp pay
Competition for highly skilled candidates and those with niche skills as well as rising living costs, drove further increases in starting pay for both permanent and temporary workers in August. The rise in salaries was the quickest since January, while the rate of temp wage growth was among the strongest seen over the past two years.
Availability of staff rises at quicker pace…
The number of people seeking new employment rose at the sharpest rate for three months in August. Redundancies remained a prominent theme when recruiters commented on the latest increases in availability, but also fewer job opportunities and concerns over current job security. Permanent labour supply continued to rise more sharply than that seen for temporary candidates, with the latter posting the second-softest rise in over three years.
…as vacancies continue to decline
Overall demand for staff fell for the thirty-fourth month in a row in August. Though solid, the rate of contraction was the second-weakest in nearly two years, having accelerated only slightly from July. Permanent vacancies fell at a solid pace that was unchanged from July, while demand for short-term staff fell following a brief rise in the previous month.
Staff Availability
Overall candidate supply rises at faster rate
At 60.9 in August, the seasonally adjusted Permanent Staff Availability Index signalled a sharp increase in candidate numbers, with growth at its fastest rate for three months. Recruiters continued to link the rise to redundancies, fewer opportunities and concerns over job security.
Further marked growth of permanent labour supply
Permanent candidate availability increased across all four monitored English areas. The North recorded the sharpest rise, while London saw the softest increase. The South remained elevated, with permanent candidate availability at 60.3.
Temporary candidate numbers continue to rise
Temporary staff availability increased again in August, extending the current period of growth to more than three years. The increase remained marked, although it was the second-softest rise in over three years. London recorded the sharpest increase, while the Midlands saw the softest.
Pay Pressures
Starting salaries increase at quickest rate since January
Permanent starting salaries rose again in August, with the Permanent Salaries Index reaching 54.1. The rate of salary inflation was the quickest seen in seven months and remained solid overall. Recruiters frequently reported that employers were increasing offers to attract highly skilled candidates or those with niche skills.
Softer, but solid increase in temp pay rates
Temporary pay rates increased for the ninth consecutive month in August. The Temporary Wages Index was 53.5. Wage inflation eased from July’s 26-month high but remained solid, with competition for scarce skills, higher living costs and candidate negotiations supporting pay growth.
Data compiled August 2026 Source: Office for National Statistics via S&P Global Market Intelligence
KPMG and REC, UK Report on Jobs: South of England
Across the South of England, the August picture remained mixed but showed several encouraging signs. Permanent placements fell for a 41st consecutive month, with the index at 48.6, although the contraction was modest and the second-slowest of the period. Temporary billings rose sharply to 55.1, the joint-fastest rate of growth since May 2023.
Steve Hickman, Reading Office Senior Partner at KPMG UK, said:
“The labour market in the South of England is starting to find firmer footing. Stronger temporary hiring activity, alongside a much softer fall in permanent placements, points to employers becoming more willing to recruit, although they remain reluctant to make longer-term commitments.”
“Pay is strengthening even as candidate availability continues to rise, which may be driven by competition for highly skilled candidates. The direction of travel feels encouraging, but big-picture improvement is still missing.”
Staff Availability
Permanent candidate availability in the South of England increased sharply again in August, with the Permanent Staff Availability Index at 60.3. The rate of growth remained marked, while recruiters continued to link higher candidate numbers to redundancies and fewer work opportunities.
Temporary labour supply continues to rise
Temporary staff availability also increased sharply, although the pace of growth eased to the slowest in 18 months. The Temporary Staff Availability Index stood at 56.2. Recruiters attributed greater availability to subdued market conditions and reduced contract opportunities.
Pay Pressures
Starting salaries increase at quickest pace since January 2024
Permanent starters’ pay increased again in August, with the Permanent Salaries Index at 54.6. This was the strongest rate of salary inflation in the South for more than two-and-a-half years and the strongest of the monitored English regions. Competition for highly skilled and niche candidates was a key driver.
Stronger rise in temp pay
Temporary wages in the South rose for the tenth consecutive month, with the index at 53.2. Pay growth remained solid, reflecting competition for particular skill sets and the continued need to attract specialist temporary workers.
Special Feature
This section features analysis from the latest official labour market data published by the Office for National Statistics (ONS).
Employment remains strongest among 25–49-year-olds
In the three months to June, the highest employment rate was recorded among those aged 35–49, at 85.1%, with the rate broadly steady over the past year. Employment was also high among 25–34-year-olds, at 84.5%, while the employment rate for 50–64-year-olds stood at 72.2%.
Youth unemployment remains elevated
The unemployment rate for 18–24-year-olds stood at 14.6% in the three months to June, close to its highest level since late 2014. By comparison, unemployment was 4.3% for 25–34-year-olds, 3.0% for 35–49-year-olds, 2.9% for 50–64-year-olds and 2.5% for those aged 65 and over.
The latest figures underline a clear age-related divide in the labour market: employment is strongest among people aged 25–49, while younger workers continue to face considerably higher unemployment.
Taken together with the recruitment survey, the data suggests that employers are operating in a market with a growing pool of available candidates but continuing shortages in specific skills. This makes targeted recruitment and effective candidate engagement increasingly important.
Overall, the August labour-market data suggests that activity is improving, particularly through temporary and flexible hiring, but a broad-based recovery in vacancies has yet to emerge.
The key message for employers and recruiters is that flexibility remains central to the recovery. Temporary hiring is providing a route to progress projects while limiting longer-term commitments, while scarce skills continue to command stronger pay despite a large overall pool of available candidates.
For recruiters, this environment rewards adaptability: providing flexible workforce solutions, accessing specialist skills and aligning closely with sector-specific demand will be important as confidence gradually improves.
August Overview
The August market picture is one of improving activity rather than a broad-based recovery. Temporary hiring is proving resilient, while permanent recruitment is beginning to stabilise nationally. However, falling vacancies, rising candidate availability and continued pay pressure for scarce skills mean employers still need to be selective and decisive.
For employers, this is an opportunity to access a wider pool of candidates while using temporary and contract recruitment where flexibility is important. For candidates, the market remains competitive, particularly in areas where employers are hiring for specialist technical capability and experience.
If you’d like to discuss your current recruitment requirements or discover how we can help you attract, assess and retain the very best talent, we’d be delighted to hear from you. Call us on 01635 734975.