UK job market remains sluggish in October, KPMG/REC survey shows

By David Milliken

LONDON (Reuters) – A decline in hiring by British employers eased slightly in October, but pay growth slowed and rising redundancies led to an increase in the number of job-seekers, an industry survey showed on Wednesday.

The Recruitment and Employment Confederation (REC), a trade body for recruiters, said the number of permanent job placements fell last month, but by the smallest amount since June, while businesses’ spending on temporary staff was steady.

“In many ways, the labour market is marking time waiting for the brakes to be taken off growth by the Bank of England. While permanent hiring is now declining more softly, temporary hiring continues to pick up the slack,” REC Chief Executive Neil Carberry said.

Last week the BoE kept its interest rate unchanged at a 15-year high of 5.25% and said it was too soon to think about cuts. Inflation remains well above target at 6.7% and is only expected to return to 2% in late 2025.

Policymakers have been unsettled by official measures of wage growth which showed private-sector pay rise at an annual rate of 8.0% in the three months to the end of August – more than double its rate before the COVID-19 pandemic.

Rapid pay growth has come despite rising unemployment and a sluggish economy which the BoE forecasts will record zero growth in 2024, raising fears of a mismatch between the job-seekers’ skills and those which employers are looking for.

The REC survey has been weaker for much of this year than official employment surveys – parts of which were suspended last month due to low response rates.

October’s REC data showed that growth in starting salaries for permanent roles was the slowest since March 2021, and below rates seen in the run-up to the pandemic.

Pay rates for temporary staff rose at the second-slowest pace since February 2021.

Overall availability of staff rose at the third-fastest rate since the start of 2021.

“There were frequent reports that redundancies and subdued hiring activity had contributed to the latest increase in staff availability,” the report said.

(Editing by Christina Fincher)