By David Milliken
LONDON (Reuters) – 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 said on Monday, adding to signs of a slowdown in Britain’s job market.
March’s survey from the Recruitment and Employment Confederation may help convince Bank of England 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 Bank of England’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 March 22.
