The threat of major public sector cuts has knocked employers’ confidence, a report from Recruitment and Employment Confederation is expected to reveal.

Ahead of the latest ONS unemployment figures, the REC’s monthly JobsOutlook survey will highlight the first signs of increased uncertainty in employers’ hiring intentions following the announcement of the coalition government’s cutbacks in public sector spending.

Nearly one in five (18%) of employers surveyed said their short-term use of contingent labour would increase in the next quarter, compared to 23% last month. Demand for permanent hire over the same period has remained static, with 14% of employers predicting growth, according to the survey.

The longer term outlook for both temporary and permanent staffing is stronger. Both workforces are set to show net gains over the next 12 months.