IT contractor jobs market in February took ‘turn’ for the better

The IT contractor jobs market carved out a potential foothold for growth in February 2025.

For the first time since August 2024, the numbers on the REC’s index for temporary tech roles last month pointed upwards.

It means Feb. 2025 put an end to five consecutive months of scores on the agency body’s IT contractor jobs index reducing.

The Recruitment & Employment Confederation (REC) sent data to ContractorUK showing temp IT billings growth is still in the red, at 41.3.

‘Turn’

But this demand-score for IT contractors in February is markedly up on January’s, when it was 39.9.

The latest score means IT contractor demand isn’t growing (growth only occurs at 50.0), but the REC nonetheless called it a “turn”.

“After a long winter, there are some hints of a turn in the labour market as we head into spring,” says REC’s Neil Carberry.

“This was the most positive number [of billings]…since [before 2024’s Autumn Budget]. Not strong numbers - but they are improvements.”

‘Companies continue to hold back on recruitment’

KPMG chief executive Jon Holt says the REC data for February 2025 show “companies continue to hold back on recruitment.”

But the “softer decline” may be sign of a growing expectation by firms of further interest rate cuts by the Bank of England.

Or maybe ‘better-than-expected’ economic figures are “starting to release some of the pressures on business,” he said.

‘Spring Statement 2025 to be fiscall-restrained’

Since Holt’s comments, official figures showed the UK economy shrunk by 0.1% in January 2025.

The worse-than-forecast data came before KPMG’s CEO said hirers face a “fiscally restrained” Spring Statement 2025.

The REC’s CEO Mr Carberry says companies are ‘holding their breath’ ahead of significant cost rises from April 6th 2025.

He pointed to changes to the National Living Wage, Employer’s National Insurance and subsequently, The Employment Rights Bill.

‘Firms holding their breath on chancellor's Spring Statement changes’

“Where does this leave us?” Mr Carberry asked in a social media post.

“From recruiters, [we’re hearing that things have] been improving and it says [to me] there is latent demand.

“But firms are holding their breath for April and [this month’s Spring Statement tax] changes.

“Trends on pay, hiring and candidate availability suggest businesses are closely managing costs while waiting.”

‘All waiting for spark to ignite latent demand’

Jo Sellick, an adviser to APSCo, says “latent demand” exists “perhaps,” but “we’re all waiting for a spark to ignite it.”

“Sadly, we've seen more damp squibs than ignition moments in the past months,” he says.

“Fingers crossed we'll get a reason to believe soon.”

‘UK employment market holding steady’

On February 27th, Indeed.com said the UK labour market had been “holding steady in recent weeks”.

“As employers brace for April’s impending rise in employment costs, companies continue to sit on their hands”, the job site said.

Indeed’s Jack Kennedy says firms are “waiting to see how things pan out” on March 26th before any major expansion plans are signed off.

‘Job postings at low levels but no longer sinking lower’

“[The mood] from businesses remains downbeat...[at odds with] a degree of underlying resilience in hiring demand,” the Indeed economist said.

“Job postings remain at low levels [but haven’t] sunk further. While few employers feel confident…they also haven’t been pulling back [more].”

Kennedy said despite job cut fears tied to April’s tax changes, a “meaningful uptick in redundancy notifications” is yet to materialise.

‘Lloyds warns on tech job redundancies’

On February 7th 2025, Lloyds reportedly warned 6,000 workers that their engineering and technology roles may be at risk of redundancy.

The bank is reviewing which of the 6,000 will be retained in a newly formed unit which, once fully staffed, will boost total headcount by 1,200.

The changes were said to be part of an internal, tech-led development to overhaul Lloyds Banking Group UK, not tied to April’s tax changes.

‘Reeves’ Spring Statement must unveil relief to ER NICs changes’

Changes next week by Rachel Reeves come as a YouGov poll shows only about one in 10 adults thinks the chancellor is doing a good job.

The reading of unpopularity for HM Treasury’s boss makes a U-turn to contentious changes to Employer NIC more likely.

Ahead of Spring Statement 2025, advisers to contractors have called for her ER NICs changes to be scrapped or shelved.

The FCSA last week joined the call, by saying “relief” should be offered if Spring Statement doesn’t axe the National Insurance changes.

‘Growth’

VMA Group director Mark Robbins took to LinkedIn to say he wants to see “positive sentiment towards growth” in Reeves’ statement.

“Nothing works without it,” said the REC’s Mr Carberry, echoing the ‘g-word.’

“Enabling companies to grow is at the heart of our prosperity. The chancellor must use the Spring Statement to build their confidence in growth.”

‘Businesses looking to chancellor for signals’

Of next Wednesday’s fiscal update, KPMG's senior partner Mr Holt said:

“Businesses which are well-capitalised will be looking for signals to support future planning and growth, and with that will come confidence to invest and create jobs.”

Jointly authored by KPMG, the REC’s Report on Jobs shows nine IT contractor skills were scarce in February 2025.

‘Short supply IT contractor skills’

The nine in “short supply” were; Cyber Security, Data Engineers, Developers, Front-End Developer, IT, IT Qualified, Python, Software, Technology.

Cyber Security, IT, Software and Technology were also scarce for permanent roles.

REC’s full-time agency members added a dearth of Analysts; Automation Testers, Data Architects, Data Scientists, Developers, Full-Stack Developers, Software Developers, Software Engineers and IT Directors.

The confederation’s technology job agencies saw an additional shortage in February 2025 of applicants for positions requiring CAD; Digital, Technical, Technical Sales, and Technology Skilled.