From Stabilisation to Opportunity in UK Recruitment

As we move through February, the UK recruitment market is showing encouraging signs that the worst of the slowdown is behind us. While this is not yet a full-throttle recovery, the direction of travel is clear: stabilisation is giving way to opportunity-particularly for recruitment businesses prepared to act decisively.

The latest REC/KPMG Report on Jobs shows the hiring downturn easing in January. Permanent placement declines have slowed to their lowest rate in over a year, while starting salaries are rising at their strongest pace since August 2024. Importantly for many agencies, demand for temporary and contract workers is strengthening, as employers turn to flexible hiring to manage project pipelines and risk.

This trend towards flexibility is echoed in broader business sentiment. The Lloyds Business Barometer continues to point to resilient optimism among UK firms, with organisations remaining confident in their own prospects and committed to workforce investment into early 2026. Businesses may still be cautious, but they are not standing still.

From a macro perspective, the S&P Global UK Services PMI confirms that the UK’s largest employment sector remains in expansion. Ongoing growth across professional services, digital, and customer-facing roles continues to underpin recruitment demand, even as other parts of the economy move more slowly.

Construction also deserves close attention. The UK Construction PMI has risen to its highest level since mid-2025, signalling a slower pace of contraction and early stabilisation following improved post-Budget clarity. This aligns with data showing an increase in construction project starts towards the end of 2025, particularly in commercial and non-residential work-laying the groundwork for future hiring across construction and engineering roles.

Alongside the data, there’s a consistent message coming through from our own client conversations. Across engineering, technology and construction, recruitment firms are reporting continued increases in bookings, enquiries and early-stage role discussions. Much of this activity reflects pent-up demand-projects paused last year are being revisited, and employers are opting to test the water through temporary or contract hires before committing longer-term.

Last month’s critique still holds true: optimism alone isn’t enough. Growth is uneven, and the opportunity will favour agencies that rebuild business development discipline, target the right sectors, lean into flexible hiring models, and properly equip teams with sharper sales skills, better market insight, and smarter use of technology and AI.

February’s greenshoots don’t suggest a sudden boom-but they do point to a market that is open for business again. Employers are hiring carefully, candidates are moving selectively, and demand is returning first to the sectors that drive infrastructure, productivity and innovation.

For recruitment leaders, the message is simple: those who prepare now-commercially, operationally and strategically-will be best placed to turn early momentum into sustained growth through 2026. If January was about confidence returning, February is about conversion.