UK Pay Growth at Lowest Level Since February 2021, According to REC Survey by Reuters

UK Jobs Market Shows Signs of Cooling Amidslower Pay Growth

LONDON – The UK jobs market displayed further signs of cooling in September, with pay growth increasing at its slowest rate in nearly four years. A recent survey suggests this trend may provide reassurance to the Bank of England as it considers potential interest rate cuts.

The Recruitment and Employment Confederation, in collaboration with KPMG, reported on their measure of starting pay growth for newly hired permanent positions, marking its lowest level since February 2021. The monthly index for permanent job placements continued to decline for the second consecutive year, although the decrease in hiring was less severe compared to August.

Jon Holt, KPMG’s UK chief executive, noted that companies are grappling with uncertainty surrounding the UK’s tax policies and overall economic conditions ahead of the finance minister’s inaugural annual budget on October 30. The finance minister has indicated that some taxes may be raised as the new Labour government aims to enhance public services and investment.

Holt suggested that the reduction in pay pressures could provide further justification for the Bank of England to consider cutting interest rates at its upcoming meeting in November. Last week, Bank of England Governor Andrew Bailey mentioned that the central bank may adopt a more proactive stance if inflationary pressures continue to alleviate.

However, the Bank’s Chief Economist, Huw Pill, adopted a more cautious perspective, emphasizing a preference for a gradual approach.

The REC/KPMG survey also highlighted an increase in the number of candidates available for job openings, while vacancies fell for the eleventh consecutive month, with the decline occurring at the fastest rate since March.