UK firms report slowest job growth in 36 months
LONDON: Starting salaries for permanent staff grew at the slowest rate in over three years last month, and spending on temporary workers fell by the most since July 2020, recruiters say, adding to signs of a slowdown in the United Kingdom’s job market.

March’s survey from the Recruitment and Employment Confederation (REC) may help convince Bank of England (BoE) policymakers that underlying pay pressures in the economy are easing sufficiently to keep inflation at its 2% target.

Official measures of pay growth have been rising at an annual rate of around 6%, roughly double the pace most BoE officials think is consistent with on-target inflation.

“The data here should support a decision by the BoE’s Monetary Policy Committee to loosen its grip on growth in the near-term future. Pay growth has slowed significantly and is now below the survey’s long-term average for new permanent roles,” REC chief executive Neil Carberry said.

However, the BoE has been reluctant to put too much weight on REC data in recent months, as the trends it has shown in the recruitment market have been slow to translate into lower wage growth for the broader workforce.

Last week, a BoE survey of employers showed firms expected to raise pay by 4.9% over the next 12 months.

Financial markets predict the BoE will start cutting rates in June or August, with nearly 0.75 percentage points of cuts priced in for 2024.

REC said overall demand for staff fell for a fifth month in a row in March and by almost as much as in February, when demand dropped by the most in more than three years.

Downward pressure on pay was caused by a greater supply of candidates, partly because of increased redundancies, it added.

REC’s data is based on a survey of around 400 recruitment agencies between March 12 and 22.

Meanwhile, concern among large UK companies about economic uncertainty has fallen to its lowest since mid-2021, but the improved mood is not yet translating into stronger investment, a Deloitte survey showed yesterday.

The UK’s economy entered a shallow recession in the second half of last year, although recently published surveys have suggested there will be a modest return to growth in the first quarter of 2024.

“Uncertainties driven by Brexit, the pandemic and inflation that have clouded the business scene for much of the last eight years seem to be clearing,” Deloitte chief economist Ian Stewart said.

Profit margins were forecast to rise for the first time in three years, and overall optimism increased for a third quarter in a row to levels similar to those just before periods of relatively strong growth in 2010, 2014 and 2021.

Despite this, businesses were more focused on reducing costs and building up cash reserves than longer-term investment.

“Expansionary strategies, such as capital spending and bringing in new products or services, are on the backburner. Given the challenges of recent years, it is perhaps unsurprising that a degree of caution persists,” Stewart said.

Geopolitics remained the biggest worry for large companies, due to fears of increased cyber attacks, higher energy prices and a general fall in demand.

Concern about UK productivity and competitiveness rose to second place, the highest in a decade, displacing disquiet about inflation, energy prices and labour shortages.

Executives expected inflation in a year’s time to fall to 2.9%, down from a prediction of 3.5% three months ago, allowing the BoE to cut interest rates to 4.25% from 5.25% over the next 12 months.

The survey is based on responses between March 12 and 25 from chief financial officers at 64 large UK companies and subsidiaries of multinationals.

The UK companies have a market capitalisation of £200bil (US$252bil), equivalent to 8% of the stock market. — Reuters
Corporate News
LONDON: Starting salaries for permanent staff grew at the slowest rate in over three years last month, and spending on temporary workers fell by the most since July 2020, recruiters say, adding to signs of a slowdown in the United Kingdom’s job market.