'The Midlands has started 2026 in a strong position' - KPMG says as report highlights rise in permanent placements

Notably, both permanent placements and temp billings expanded at softer rates than those seen in December - according to the report compiled by S&P Global.

It found the availability of both permanent and temporary workers increased at weaker rates. Nevertheless, candidate supply continued to rise markedly overall, with anecdotal evidence highlighting redundancies as a key driver of growth.

Demand for labour meanwhile deteriorated, with temporary vacancies declining for the first time in six months. Finally, pay pressures eased across the Midlands in January, with starting salaries and temp wages increasing at slower rates that were weaker than those seen nationally.

The KPMG and REC, UK Report on Jobs: Midlands is compiled from responses to questionnaires sent to around 100 recruitment and employment consultancies in the Midlands.

Recruiters in the Midlands signalled a marginal increase in permanent placements in January. The respective seasonally adjusted index posted above the neutral 50.0 level for the second successive month, but edged down from December. Where a rise was noted, respondents partly attributed this to a relative improvement in client confidence after November’s Budget announcement, which had lifted some uncertainty.

Once again, the Midlands was the only monitored English area to record a rise in permanent staff appointments.

A sixth consecutive monthly rise in billings received from the employment of temp workers was recorded across the Midlands in January. The pace of growth eased notably from December and, though marked, was the weakest in three months. Anecdotal evidence linked the latest uptick to rising business activity at clients.

The Midlands recorded the strongest rise in temp billings of all four monitored English regions. The South of England was the only other area to report an increase. Meanwhile, London and the North of England recorded further reductions.

Permanent vacancies fell for a 20th consecutive month across the Midlands in January - with the pace of decrease the fastest since last August and sharp overall.

In addition, demand for temp workers fell for the first time in six months during January. The pace of decrease was solid, but the weakest of the four monitored English regions.

The latest survey data revealed vacancies fell more sharply across the UK as a whole, however.

An increase in permanent staff supply was recorded across the Midlands in January. According to panellists, company layoffs were generally behind the latest uptick. The rate of expansion, however, was the softest in 15 months - having eased in four of the last five survey periods.

Moreover, the pace at which permanent staff supply increased across the Midlands was slower than the UK-wide average. The availability of permanent workers improved at softer rates across all four monitored English areas.

The availability of temporary or contract staff rose sharply at the start of the year. Short-term candidate availability has now risen in each of the past 33 months. Redundancies were reportedly behind the latest increase in temp candidate numbers. That said, the rate of expansion was the weakest in one-and-a-half years.

Slower rises in temp staff availability were also seen across the three other monitored English areas.

The seasonally adjusted Permanent Salaries Index remained above the neutral 50.0 value in January, indicating an increase in starting salaries across the Midlands for nearly five years. But the rate of inflation eased for the second straight month to a mild pace that was the weakest since last July.

The Midlands also recorded the softest rise in starting salaries of all four monitored English areas. Starting salary inflation was the strongest across the North of England.

January data revealed a further rise in temp wages across the Midlands, with increases recorded in 13 of the last 14 survey periods. The pace of inflation was solid, albeit slightly weaker than that seen at the end of 2025.

For the first time in eight months, all four English regions monitored by the survey recorded higher pay for short-term staff, with London leading the upturn.

Kate Holt, people consulting partner at KPMG in the Midlands, which has a regional base in Birmingham in the city's business quarter, said: “The Midlands has started 2026 in a strong position, reporting growth in permanent placements for the second consecutive month – remaining the only English region to do so. While the increase had softened, it reflects momentum and confidence among Midlands employers that sets the region apart from the rest of the country. Temporary billings also continued to expand, achieving their sixth consecutive month of growth.

“What's notable is the shift in pay dynamics – temp wages rose sharply, the strongest increase across all monitored regions, signalling demand for flexible skills in the face of broader economic uncertainty. For Midlands businesses, this combination of steady permanent hiring and strategic use of temporary staff positions the region well to capitalise on a brightening outlook and start planning for the longer term. The ability to access a strong talent pool while maintaining flexibility gives forward-thinking employers a genuine competitive advantage for the year ahead.”

Neil Carberry, REC chief executive, added: “There have been increasing signs from businesses as we enter 2026 that uncertainty on hiring plans is giving way to action. That does not mean a general hiring upswing, but the “wait-and-see” period seems to be ending, with the Midlands seeing a rise in permanent new joiners and growth in temp billings.

“The decisions firms are now making involve lots of trade-offs, such as whether to create jobs in the UK or elsewhere, or which jobs need the human touch as opposed to an automated solution. A growing, inclusive economy requires high levels of employment – a focus on encouraging firms to create jobs rather than discouraging that investment is more important than ever. So far, the Government has struggled to convince businesses it wants them to hire. That must change in the decisions that are made this year if we are to avoid a continued rise in unemployment.”