Stay informed with free updates
Simply sign up to the UK employment myFT Digest — delivered directly to your inbox.
The UK jobs market slowed and growth in starting salaries slipped to a three-year low in January, according to a closely watched survey that could bolster the Bank of England’s confidence that inflationary pressures are easing.
The monthly report, published on Thursday by KPMG and the Recruitment & Employment Confederation, showed hiring activity was slower than usual for January, with an index of permanent placements falling to 43.4 from 45.6 the previous month and vacancies falling.
Recruiters responding to the survey said that for the 11th month running there were more candidates available to fill vacant posts, with many of them linking this to redundancies, as well as slower hiring.
Meanwhile recruiters said starting salaries for permanent joiners were still rising, but the pace of growth was now the softest seen in 34 months, and was below the historical average.
“Pay growth has normalised, inflation is dropping and the hiring market has been cooling for a year now,” said Neil Carberry, the REC’s chief executive, who argued “it’s high time that the Bank of England starts releasing the brake pedal on our economy”.
The BoE’s monetary policy committee has made it clear it wants to see more evidence that wage growth is slowing before it can declare that “the job is done” and start to cut interest rates from their current 16 year high of 5.25 per cent.
Sarah Breeden, a BoE deputy governor, said on Wednesday that “for services inflation to fall to levels consistent with [the BoE’s 2 per cent inflation] target, some combination of a further moderation in labour cost growth and firms’ margins will be needed”.
Monitoring wage growth and how firms passed labour costs into prices over the new few months would be “vital”, she added, as most employers would conclude annual wage setting processes by April.
The KPMG/REC survey has been closely watched by the BoE in recent months, with policymakers voicing doubts over official data that until recently showed wage growth running at even higher levels.
The survey paints a similar picture to figures released this week by Indeed, the job search website, which found job postings had fallen below their pre-pandemic level for the first time since spring 2021, with a deeper slump in London, where postings were a fifth below their February 2020 level.
“The UK labour market hasn’t received its usual January injection of job postings,” said Jack Kennedy, senior economist at Indeed UK.
But Indeed’s data points to a sharp divide between lower paid sectors such as cleaning and childcare, which are still struggling to hire, and white collar areas such as law, marketing and IT, where ads are attracting higher numbers of clicks from jobseekers.
