UK employer demand for temporary workers has risen amid concerns about the economy, according to the latest Recruitment and Employment Confederation (REC) JobsOutlook.

In response to higher uncertainty, hiring intentions for agency workers in the short term increased to +10, from +3. Greater use of temporary work is a typical employer response to this kind of situation.

The REC’s research showed firms have been feeling progressively more positive about their own prospects for the past 12 months, despite the strong concerns they have about the performance of the wider economy. However, this trend has reversed this month, with a minor decrease in confidence in investing in their own business. This is likely driven by the shallow recession the UK entered last autumn.

Forward trends data, including from the REC’s survey, suggest that this month may be a blip, with confidence strengthening again as inflation falls.

Neil Carberry, Chief Executive of the REC, said, “The Bank of England has been squashing growth to get inflation down for the last year, but now we really need to go for growth to boost incomes and fund public services. We are convinced there is underlying growth potential, as seen by the stronger February sentiment on permanent hiring intentions by comparison to the previous two months.”

The JobsOutlook also showed that across December 2023 to February 2024, business confidence in the UK economy improved by two points, but remains negative (-40). When assessing employers’ confidence in making investment and hiring decisions for their own business, sentiment has fallen into negative territory for the first time since this time last year (net: -7). This reverses a year-long trend of gently improving confidence from hirers.

The REC stated that given the scale of the growth of the temp market since 2020, some tapering in demand in 2023 was inevitable.

Forecast demand for short-term agency worker hiring rebounded strongly (by seven points, to net: +10) in this most recent three-month period. Sentiment in the majority of regions also remained positive. And medium-term forecast (four months to 12 months) also rebounded by 15 points (to net: +15).

At net: +15, the UK-wide balance of employer sentiment towards short term permanent hiring was flat when assessed as a full quarter. But there was a notable uptick in February (net: +26), from net: +10 in December and net: +11 in January. And while the medium-term sentiment dropped by seven points this quarter (to net: +16), respondents were more positive in February (net: +21).

Carberry said, ““Recruiters are the WD-40 of the labour market. They help companies grow and workers find opportunities, including 25.7 million temporary and contract placements in 2022. Their expertise can also help government be more effective. From the Apprenticeship Levy to infrastructure and effective regulation there is a lot more to do that will help tackle inactivity, boost investment and raise wages. But only a true partnership approach, based on a clear industrial strategy, can deliver this.”