Permanent hiring falls at fastest pace in 10 months as employers turn to temporary staff

The jobs market weakened further in May as employers cut back on permanent recruitment and increased their reliance on temporary staff, according to the latest Report on Jobs from KPMG and the Recruitment and Employment Confederation (REC).

The survey found that permanent staff placements fell at the fastest pace since July 2025, extending a run of contraction that has now lasted 44 consecutive months. The permanent placements index fell to 44.1 in May from 47.5 in April, reaching its lowest level for 10 months.

The REC said employers were responding to growing uncertainty around the economic outlook, with geopolitical tensions in the Middle East and domestic political developments contributing to a more cautious approach to recruitment.

In contrast, temporary hiring strengthened during the month. The temporary staff placements index rose to 52.2 in May from 50.4 in April, reaching its highest level since May 2023 as businesses sought greater workforce flexibility.

The combined weighted average of the permanent and temporary placements balances fell to 45.7 from 48.1 in April, indicating a slight loosening of labour market conditions overall. However, the figure remained above the 2025 average reading of 43.8.

The survey suggests businesses are continuing to recruit where necessary but are increasingly favouring temporary staffing arrangements over permanent appointments as they manage cost pressures and economic uncertainty.