UK employment market shows 'rays of light' for jobseekers with upturn in pay, study shows
A KPMG and REC monthly survey shows UK temporary vacancies rose for the first time in two years and permanent job placements stabilised, ending a 45-month decline.
Intelligence analysis by Llama
UK jobs survey from KPMG and the Recruitment and Employment Federation points to a tentative thaw: temp vacancies up for the first time in two years, permanent placements stabilising after 45 months of decline, and starting salary growth hitting a six-month high.
Imagine a giant shop where nobody has hired new helpers for almost four years. This month, for the first time since a long time, the shop finally stopped sending helpers away and even needed a few more on short-term contracts. Bosses are also paying slightly more to attract good people — a small sign the UK's jobs freeze may be ending.
Analysis
KPMG and REC survey
The latest KPMG/REC Report on Jobs describes a labour market that, for the first time since Liz Truss resigned as prime minister in late 2022, did not record a month-on-month decline in permanent staff appointments. That alone is the headline. Temp billings grew at the fastest pace since early 2023 and permanent vacancies fell only softly, leaving overall worker demand shrinking at its weakest rate in 22 months. Starting salary inflation hit a six-month high and temp wage growth a 26-month high — clear evidence that recruiters cannot easily fill roles, despite a still-elevated pool of available candidates.
The survey's interpretation is not uniform, however. Maxine Bligh, the REC's chief membership and innovation officer, framed the data as "rays of light" and called on the government to act on business confidence. Callum Licence of KPMG and Switzerland struck a similar note, pointing to the recovery in temporary work as proof that "businesses are starting to press ahead with investment". Both voices lean on the same data points: temp vacancies up for the first time in two years, temp billings rising for a fourth straight month, and permanent placements stabilising across London and the Midlands — with London postings alone at a near four-year high.
Rob Wood's caution
Pantheon Macroeconomics' chief economist Rob Wood urged readers not to over-interpret the print. He labelled July's combination of weaker temp hiring and stronger permanent hiring a possible "Burnham Bounce", a reference to Andy Burnham's recent appointment, and warned that "sentiment could easily drop back somewhat" given the resumption of hostilities in the Middle East. Crucially, Wood argued that rising employment and accelerating wage gains leave the Bank of England's monetary policy committee little room to ease, even if the official statistics continue to soften. The permanent salaries index, he noted, remains above the 2025 average of 52.3 — suggesting pay has not slowed over the past 18 months even as headline gauges wobbled.
Burnham Bounce versus the broader picture
The immediate question for markets is whether the July stabilisation is a true turn or a one-off reshuffle of risk between temporary and permanent roles. Wood himself admits the pattern of falling uncertainty normally associated with a move into permanent work sits oddly with Middle East tensions in July. If geopolitics tightens, recruiter surveys tend to lead official data by a quarter or two — meaning any August or September wobble in the ONS series would still be consistent with this report's message. For the Bank of England, the upshot is asymmetric: a labour market that is steadying rather than loosening, and pay growing above an inflation-target-consistent rate, makes further rate cuts a tougher sell even as growth stalls elsewhere.
Key points
- Temporary vacancies rose for the first time in two years, per the KPMG/REC survey
- Permanent job placements stabilised, ending a 45-month run of declines since Liz Truss's resignation in 2022
- Starting salary inflation hit a six-month high and temp wage growth a 26-month high
- Rob Wood of Pantheon Macroeconomics warned of a possible 'Burnham Bounce' and Middle East risk
- London and the Midlands led renewed permanent hiring, with London postings at a near four-year high
If the July stabilisation holds, employers could shift from short-term contract hiring to genuinely adding permanent posts over the autumn, lifting household incomes and consumer demand just as the Bank of England weighs its next move. Licence argues that the data across the board is "moving in the right direction", which would extend the recovery in business investment.
Wood at Pantheon flagged the risk that the print reflects a temporary "Burnham Bounce" rather than a real turn, and warned Middle East tensions could pull sentiment back down. Persistent above-target wage growth also narrows the Bank of England's room to cut rates, leaving monetary policy tighter for longer if hiring picks up before productivity does.
