UK’s hot labour market cools a touch in January – REC survey

Workers travel through London Bridge rail and underground station during the morning rush hour in London, Britain, September 8, 2021. REUTERS/Toby Melville/

LONDON, Feb 10 (Reuters) – Surging demand by British employers for staff lost a bit of momentum in January when hiring rose at the slowest rate for nine months, although pay growth remained strong, a survey showed on Thursday.

With the Bank of England worried about over-heating in the labour market, the Recruitment and Employment Confederation (REC), a trade body, and accountants KPMG said their index of demand for staff eased to 68.6 from 69.3 in December.

That was the lowest reading since May but still well above its long-run average.

Starting salaries for permanent staff continued to rise at a rapid pace – the third-highest on record – but slowed for temporary staff.

“The jobs market is still growing strongly at the start of 2022,” said Neil Carberry, REC chief executive.

“With competition for staff still hot, companies are having to raise pay rates for new starters to attract the best people. And the cost of living crisis means there is also more pressure from job-seekers who want a pay rise.”

Staff shortages and strong wage growth that appears to be faster than pre-pandemic rates are a large part of the reason why the BoE raised interest rates in February for the second time in two months, ahead of other central banks.

The central bank thinks pressures in the labour market will stop inflation falling back fully to its 2% target unless borrowing costs rise further.

A separate survey published by the British Chambers of Commerce showed 63% of more than 1,000 firms said increased wage bills were a factor driving up price rises.

The BCC urged the government to help smaller firms facing higher fuel costs and to delay April’s planned increase in social security contributions by a year.

Reporting by Andy Bruce
Editing by William Schomberg

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