British employers cut their job vacancies for the first time in more than two-and-a-half years in September and reduced their hiring again, a recruiters’ industry body said on Wednesday, adding to signs of a cooling in the labour market.
In a set of data that the Bank of England will use as it judges whether it should resume raising interest rates or keep them on hold in November, the contraction in vacancies represented the first fall in demand for staff since February 2021, the Recruitment and Employment Confederation (REC) said.
However, the fall was marginal and was mostly in the public sector.
Similarly, the hiring of permanent staff extended its year-long decline but the fall was less severe than August’s sharp drop and was also smaller than July’s reduction.
REC Chief Executive Neil Carberry said the latest figures suggested the drop in the jobs market was levelling out.
“This feels like a market that is finding the bottom of a year-long slowdown,” Carberry said. “And the relative buoyancy of the private sector is likely to be driving this more positive outlook.”
Samuel Tombs, an economist with consultancy Pantheon Macroeconomics, said the survey suggested month-to-month growth in wages would slow later this year, reducing the chance of more BoE rate hikes in the near term.
REC, which publishes the data along with KPMG, said starting salaries rose by the least in two-and-a-half years and there were reports of strains on company budgets.
The BoE said last month that the REC figures to August might herald a decrease in pay growth as it kept interest rates on hold after 14 back-to-back increases.
Other measures of pay have also pointed to an easing of the pressure on employers to push up salaries but so far the official measure of core earnings growth for workers in Britain has been running at record highs.
REC said spending on temporary workers returned to growth after a dipping in August for the first time since July 2020.
Firms in hospitality, engineering, logistics and healthcare continued to show very strong demand for staff, it said.