UK Job Market Shows Rays of Light: Pay Upturn and Temp Hiring 2026

The UK job market is showing rays of light for jobseekers, with an upturn in pay and the first rise in temporary vacancies in two years, according to a new study. This positive shift signals a gradual stabilization in employment conditions, offering hope for those seeking work.

Key Findings from the KPMG and REC Survey

The monthly survey from KPMG and the Recruitment and Employment Federation reveals that employers have stopped shedding permanent jobs, with placements stabilizing in July. Temporary billings rose at the fastest pace since early 2023, indicating a growing demand for flexible staffing.

Recruiters noted that demand for permanent staff remained subdued amid political and economic uncertainty, but some employers continued to hire for new projects. This mixed picture suggests a cautious but improving labor market.

Wage Growth Accelerates

Wage growth accelerated to its strongest since January, with the permanent salaries index above the 52.3 average seen in 2025. This indicates that pay growth has not slowed over the past 18 months, providing a welcome boost for workers.

Vacancy Growth and Staff Availability

Vacancy growth is recovering, and staff availability remains high but easing slightly. These factors point to a labor market beginning to steady, with most surveys now consistent with rising employment and wage growth plateauing at an above-inflation target-consistent rate.

Expert Insights: The 'Burnham Bounce' and Bank of England Caution

Rob Wood, chief economist at Pantheon Macroeconomics, highlighted that rising employment and wage gains suggest the Bank of England's monetary policy committee needs to be cautious. He noted a possible 'Burnham Bounce' in the survey, as the drop in temporary hiring and rise in permanent in July sits oddly with the resumption of hostilities in the Middle East. Sentiment could easily drop back somewhat.

Comparison: Permanent vs. Temporary Hiring Trends

Key Takeaways for Jobseekers

• Pay growth is accelerating, offering better compensation prospects.
• Temporary roles are on the rise, providing more immediate opportunities.
• Permanent hiring is stabilizing, signaling a steadier market.
• Vacancy growth is recovering, expanding the range of available jobs.
• Employers are starting to invest again, leading to new project-based hiring.

What This Means for the Economy

The improvement in the UK employment market is a positive sign for the broader economy. With wage growth above inflation, consumer spending may receive a boost, potentially supporting economic recovery. However, experts caution that geopolitical uncertainties could still impact sentiment.

Businesses are pressing ahead with investment, which is encouraging. As Callum Licence, head of advisory at KPMG UK and Switzerland, said: "Despite ongoing uncertainty it's encouraging that businesses are starting to press ahead with investment, which means across the board we are starting to see the data moving in the right direction."

Future Outlook

While the current data is promising, the labor market remains vulnerable to external shocks. The Bank of England will likely monitor wage growth closely to avoid inflationary pressures. Jobseekers should consider both permanent and temporary roles to maximize opportunities.

FAQ

In summary, the UK employment market is showing rays of light, with pay upturns and increased temp hiring. Jobseekers should stay informed and consider flexible options to capitalize on these positive trends.