UK job market on its way back after downturn, recruiters say

UK job market on its way back after downturn, recruiters say

LONDON (Reuters) – A fall in permanent hiring by employers in Britain was its least severe in more than a year in May and the recruitment market appears to be poised for a recovery, an industry survey showed on Monday.

In a report that will be studied by the Bank of England as it weighs up when to start cutting interest rates, the Recruitment and Employment Confederation said permanent hiring fell by the smallest amount in 14 months.

Billings for temporary staff dropped by the least since January.

“The jobs market looks like it’s on its way back, with clear improvements over last month on most key measures,” REC Chief Executive Neil Carberry said.

The REC survey has generally painted a weaker picture of the labour market than broader official data, which showed annual wage growth of 6% in the first quarter of 2024.

Britain’s July 4 national election and the likelihood of interest rate cuts by the BoE later this year were likely to remove the hesitancy of employers about hiring, Carberry said.

“These numbers suggest that caution may be starting to abate,” he said.

REC said pay rates for permanent staff rose at a pace that was only slightly slower than April’s four-month high. Vacancies fell at the slowest pace in a seven-month downturn.

In a possible relief for the BoE, the availability of staff grew by the most since December 2020, boosted by a mix of redundancies, higher unemployment and the reduction in demand for staff.

The BoE is watching the labour market closely as it assesses when inflation pressure in the economy has abated sufficiently for it to cut borrowing costs for the first time since the start of the coronavirus pandemic more than four years ago.

(Writing by William Schomberg; editing by David Milliken)