Recruitment Industry Trends
Following the publication of the KPMG and REC, UK Report on Jobs for February 2026, Paul Sharpe, Founder of NorthStar People, shares a summary of the key findings and what they mean for the recruitment industry as edge closer to the market changes.
Key Findings for February 2026 UK Labour Market
Staff appointments
- Permanent staff appointments fall only slightly in February: Recruiters across the UK signalled a much softer and only marginal reduction in permanent placements midway through the first quarter. Notably, the pace of decline was the slowest seen since March 2023.
- Temp billings fall back into decline: Adjusted for seasonal factors, the Temporary Billings Index signalled a reduction in billings received from the employment of short
term staff for the third time over the past four months in February.
Vacancies
- Demand for staff decreases at softest pace in nine months
- Permanent vacancies: Engineering was the only sector to see an improvement in demand for permanent staff during February
- Temporary vacancies: February survey data pointed to a broad-based reduction in demand for temporary workers, with the Retail sector seeing by far the quickest reduction in vacancies.
- Public & private sector vacancies: Demand for staff fell across both the private and public sectors during February.
- A deeper insight can be seen inside KPMG and REC, UK Report on Jobs section 6 - Demand for skills.
Staff availibility
- Sharper rise in candidate numbers in February: At 59.1 in February, the seasonally adjusted Total Staff Availability Index rose from a one-year low of 58.1 in January and pointed to a sharper increase in the overall supply of candidates. However, the upturn remained less
pronounced than that seen on average over 2025. - Availability of permanent workers increases at faster pace: The number of people seeking permanent positions across the UK continued to increase in February, thereby stretching the current run of growth to exactly three years.
AI & the recruitment industry
- Artificial Intelligence (AI) is one of the most talked-about, thought-about, and reflected-upon
subjects in today’s labour market. - The data collected showed that 24.3% of respondents were already using AI to enhance business
practices. Furthermore, 22.3% were planning to introduce AI into their tech stack within the next
12 months.
A deeper insight can be seen inside KPMG and REC.
Paul Sharpe's perspective
Permanent placements fall only slightly in February
- Staff appointments fell only slightly, marking the weakest rate of decline since March 2023.
Temporary billings
- Following a brief rise in January, temp billings saw a modest decline in February.
Demand for staff
- While job opportunities across the UK continued to decrease, the rate of contraction was the softest recorded since May 2025.
Pay pressures
- Starting salary inflation slowed to its lowest level since October 2025. Temp wage growth also softened, rising only modestly.
Candidate Availability:
- Total staff supply rose rapidly, driven primarily by a strong increase in the availability of permanent workers.
Sector
- Engineering saw the softest drop in demand for temp vacancies, while the Retail sector experienced the steepest reduction in temporary job opportunities.
Regional performance summary:
- Skills can be reported as being both in short supply and excess supply as we survey various recruitment agencies across the country, so there is geographical variation, as well as the possibility of candidates with particular skills being concentrated in certain areas.
Skills in short supply
-
North of England (Burnley!): This region was the "standout performer" across the four monitored English regions. It saw the first rise in permanent placements in over two-and-a-half years.
-
Midlands: This was the only English region to record an increase in temporary billings, although growth slowed to its lowest point in six months.
-
London: Reported the steepest rate of contraction in temporary billings among the tracked regions.
-
Scotland: Experienced a divergence in trends, with permanent staff appointments rising for a second consecutive month while temporary billings decreased for the first time since November.
General update on business focus:
At the coal face it still feels tough, but some agencies are showing year on year growth. We are still seeing owners prioritise AI and whilst this isn't a bad thing it shouldn't dictate your service proposition. In fact, it should be the other way round. Over the last 3 months we have been reviewing real time data from agencies regarding the value of an existing customer vs a new one. Don't neglect your customer relationships. I have attached our findings.
Follow the link to benchmark your recruitment agency across the 13 key business metrics and get a FREE report.
