Employers are seeking to expand their temporary agency workforce in the short and medium terms.

According to the Recruitment and Employment Confederation’s latest JobsOutlook, the overall outlook for jobs remains mixed but that flexible options such as temporary and contract work can provide a stepping stone back into employment for jobseekers.

Recent data such as the REC/KPMG Report on Jobs – which tracks actual number of placements rather than future hiring intention – has shown continued growth in the demand for staff, although the rate of grown has fallen to a 12-month low. This levelling out is a cause for concern, especially at a time when the private sector will increasingly be called upon to absorb expected job losses in the public sector.

But the JobsOutlook data provides some encouragement with 85% of employers surveyed planning to maintain or increase numbers of agency staff, a 10-point improvement on the previous month.

There has also been little change in employers’ plans for their permanent workforces, with 94% intending to either grow or keep static their current numbers in the next three months – no change on last month and a further sign of employers being cautious about hiring new permanent staff.

Over the next 12 months, 26% say they will grow their workforce and another 67% intend to keep them the same – a total of 93%, which is a one-point rise on the previous month.

Roger Tweedy, the REC's director of research, said: "This month’s results confirm that employers are remaining cautious against the backdrop of an uncertain economy and a volatile jobs market.

"However, there are some positive messages with the most obvious sign of movement being a renewed positivity towards using agency workers as a means of bringing extra resources and flexibility into their operations. This demonstrates the important role of flexible working models as a vital resourcing option for UK businesses as well as a way back into the labour market for jobseekers.

"Some encouragement can also be drawn from a slight drop in the number of employers planning headcount freezes or more redundancies. However, with the Comprehensive Spending Review in just over a week’s time, next month’s survey could again present a very different picture of how employers view the state of the jobs market."

Ahead of the chancellor’s announcement on October 20th, 30% of those public-sector employers surveyed for JobsOutlook said they expected either ‘quite’ or a ‘very’ serious impact on their business as a result of the proposed cuts, while 54% of private-sector businesses said they thought they would have little or no impact. However, more than one in three in both sectors still do not know what the impact is likely to be on them.