Hiring intentions rise while confidence falls: employers tell the REC too much has landed at once

Employers intend to hire more people over the coming year but have less confidence in the economy than at any point since the survey began asking, according to the Recruitment and Employment Confederation's JobsOutlook, published on 28 July.

The survey of 707 employers, run with Whitestone Insights between 13 April and 30 June, puts the net balance for short-term permanent hiring at plus 9 per cent, up five points on the previous quarter, and for permanent hiring over four to twelve months at plus 10 per cent, up four. Short-term temporary hiring intentions are at plus 3 per cent, up two, and medium-term temporary intentions unchanged at plus 5 per cent. All four measures are positive and three are improving.

The confidence gap

Set against that, confidence in the economy stands at minus 47 per cent net, down four points, and confidence in making hiring and investment decisions at minus 14 per cent, down two. The monthly figures inside the quarter show the direction of travel: economic sentiment was at minus 56 per cent in April and had recovered to minus 43 per cent by May, while hiring confidence moved from minus 24 per cent to minus 9 per cent over the same period.

The REC's reading is that employers want to hire and do not trust the environment they are hiring into. Maxine Bligh, the confederation's chief membership and innovation officer, said the government had loaded too much onto employers at once, making it harder for the job market to get off the ground. The list she has in mind is the one every recruiter recites: the employer National Insurance rise of April 2025, the Employment Rights Act and its zero-hours provisions, the umbrella joint and several liability rules of April 2026, and the Fair Work Agency that began enforcing all of it in the same month.

What it means for contract demand

The survey period ended a month before the change of Prime Minister, and the REC's headline for its release, that a new-look government must turn economic doubters into believers, was written for the incoming administration. The Autumn Budget on 28 October is the first opportunity to answer it.

For the contract market the more useful signal is the gap between the two sets of numbers. When employers intend to hire but lack confidence to commit, the historical pattern is that they hire flexibly first: temporary and contract engagements rise before permanent placements do. The KPMG and REC Report on Jobs for July, published on 10 August, showed exactly that, with temporary billings rising for a fourth consecutive month and permanent placements only stabilising after a 45-month decline.

Recruiters in the technology market report the same shape. Project-based engagements for data, artificial intelligence and security work are being signed while permanent headcount plans wait for the Budget. Whether that turns into a sustained recovery in contract demand depends on whether the confidence figures follow the intentions upward in the autumn survey, or the intentions follow the confidence down.