After almost four years of falling permanent recruitment, the UK hiring market may finally be starting to recover. In July 2026, permanent placements stabilised after 45 consecutive months of decline, according to the KPMG and REC Report on Jobs. Temporary recruitment also improved, with temporary billings increasing for the fourth month in a row.
That does not mean the recruitment market has returned to how it was before. Employers are still cautious, while the skills they need continue to change.
For technology and transformation teams, this creates a different hiring challenge. Businesses are increasingly starting with a skills gap, project or business problem and then deciding what type of resource they need.
Is UK Permanent Recruitment Finally Recovering?
July’s figures are significant because they ended the longest period of falling permanent recruitment recorded by the Report on Jobs. The permanent placements index reached 50.0, marking the point between growth and decline.
The result should still be treated carefully. Permanent vacancies continued to fall, although at their slowest rate for almost two years. Employers also remain cautious about making long-term hiring decisions.
Temporary recruitment has been more positive. Temporary billings increased for a fourth consecutive month, while temporary vacancies increased for the first time in two years.
This suggests some businesses are increasing workforce capacity while still using flexible options where they are not ready to make permanent commitments.
What Does the UK Recruitment Recovery Mean for Employers?
A recovery in recruitment does not mean employers will simply start hiring in the same way they did before the downturn.
Many businesses have spent several years controlling costs, delaying projects and asking existing employees to take on more work. As activity increases, those approaches may become harder to maintain.
A technology team may need additional skills for a transformation project. A business may discover that it lacks expertise in data, cyber security or cloud. Another organisation may need project leadership but be unsure whether it needs a permanent Project Manager or temporary support.
These are not just recruitment questions. They are resourcing questions.
The right answer could be a permanent employee, a contractor, internal development or a combination of approaches.
Why Recruitment Is Becoming More About Resourcing Strategy
Recruitment often starts with a job title. A business decides it needs a Project Manager, Business Analyst, Software Engineer or IT Manager and then looks for someone who matches the job description.
That approach does not always work for complex technology and transformation projects.
The better starting point is the problem the business needs to solve. What skills are missing? How long will they be needed? Does the business need permanent capability or specialist support for a specific project?
A permanent employee may make sense when the organisation needs long-term expertise. A contractor may be better for a project with a clear end date. Internal development may work when existing employees already have some of the required skills.
Understanding the requirement first can also identify problems with a job description before the vacancy reaches the market.
Why Candidate Availability Does Not Mean Every Skill Is Easy to Find
There may be more candidates available in parts of the UK labour market, but that does not mean employers can easily find every skill they need.
Skills England’s 2026 Annual Skills Report highlights ongoing skills shortages across the UK, with employers reporting that more than a quarter of vacancies are hard to fill because of skills shortages.
This matters for technology recruitment. An employer may receive many applications for a technology vacancy while still struggling to find someone with the right technical experience, seniority and business knowledge.
The size of the candidate pool is therefore only part of the picture. Employers also need to understand whether the specific skills they need are available.
Could the Recruitment Downturn Have Hidden Skills Shortages?
A long period of lower hiring can make skills shortages harder to see.
When businesses delay projects and reduce recruitment, demand for some skills falls. This can make the market appear well supplied even when there are not enough experienced workers coming through.
As demand increases, those shortages can become clearer.
Technology faces its own challenge. The digital and technologies sector is expected to need significant additional workers over the next decade, while many priority occupations already face high demand.
For employers, waiting until a project starts before looking for specialist skills could therefore create problems.
What Does the Recovery Mean for Technology Recruitment?
Technology hiring could become more competitive as businesses increase investment in digital projects.
The skills required are also changing. AI is affecting how technology teams work and what employers expect from technology professionals.
Technical knowledge remains important, but organisations may also need people who can solve problems, communicate clearly, work with stakeholders and understand how technology affects the wider business.
Are Technology Skills Becoming Harder to Hire?
The UK is likely to need more technology professionals over the next decade.
The UK Institute for Technical Skills & Strategy’s 2026 research estimates that up to 120,000 additional technical professionals may be needed by 2035 to support growth in the UK’s Digital and Technologies sector. It also identifies persistent skills shortages in areas including AI and cyber security.
This does not mean every technology role will become difficult to fill. It does mean employers should not assume that a large candidate pool will make specialist recruitment easy.
The problem becomes greater when one role asks for several difficult-to-find skills. A senior technology position requiring specialist technical knowledge, leadership experience and industry expertise may have a much smaller candidate pool than the job title suggests.
Are Employers Paying Enough for the Skills They Need?
Salary is another important part of recruitment.
The July Report on Jobs found that permanent starting salary growth reached a six-month high, with employers increasing salaries in some areas to attract people with the skills and experience they needed.
This does not mean every employer needs to increase salaries. It does mean hiring teams should check that the salary matches the actual requirements of the role.
Adding more responsibilities without reviewing salary and seniority can make a vacancy harder to fill.
Should You Hire One Person or Build a Team?
Not every skills gap can be solved with one new hire.
A business might ask for a senior technology professional who can manage architecture, project delivery, business change and stakeholders. In reality, these may be several different areas of expertise.
Trying to put everything into one role can reduce the number of suitable candidates and increase salary expectations.
A different approach may work better. One permanent employee could provide leadership while contractors provide specialist skills for a specific project. An existing employee could also develop their skills while the business recruits externally for a particular gap.
Why Workforce Planning Matters as Hiring Demand Recovers
Workforce planning becomes more important when an organisation expects its skills needs to change.
Technology teams often need different skills at different stages of a project. A business introducing AI may need technical specialists as well as people who understand data, governance and change. A major transformation may also require different skills during planning and implementation.
The CIPD’s 2026 Labour Market Outlook recommends taking a strategic approach to workforce planning, including using flexible resourcing to help avoid future skills gaps.
This allows employers to consider which skills they already have, which they can develop and which they will need to recruit.
What Should Employers Do as the UK Recruitment Market Recovers?
The stabilisation of permanent recruitment is positive, but employers should not assume hiring will simply return to the way it worked before.
The market has changed. Technology has changed. Skills requirements have changed. Some shortages have also become more visible.
For hiring teams, the priority should be understanding what capability the business actually needs.
That means looking at the problem, identifying the required skills and checking whether those skills are available in the market. Employers should also consider whether they need permanent employees, contractors, internal development or a combination of approaches.
What Comes Next for UK Recruitment?
The July figures do not guarantee a strong or lasting recovery. Economic conditions, employment costs, government policy and global events could all affect hiring decisions.
The stabilisation of permanent placements is still important after 45 months of decline. Temporary recruitment has also improved, suggesting some businesses are beginning to increase workforce capacity.
For technology and transformation employers, the next step will be deciding how to build that capacity.
Some businesses will need permanent employees. Others will need contractors or specialist project support. Many will need a combination of recruitment, flexible resourcing and internal development.
The main change is that recruitment increasingly starts before the vacancy. It starts with understanding the business problem, assessing the skills available and deciding what type of resource will provide the right solution.
The UK recruitment market may be moving towards greater stability, but the next phase is unlikely to look exactly like the last one. Employers that understand what skills they need and plan their resourcing early will be better prepared as hiring demand increases.
