UK labour market strengthens following recent slowdown
British employers demonstrated increased wages and a renewed interest in hiring during December, according to a survey by the Recruitment and Employment Confederation (REC). This development could potentially indicate continued inflationary pressures in the UK labour market, which the Bank of England has been closely monitoring.
Although the survey revealed that the decline in permanent worker hiring continued in December, the rate of decline was less severe than in November. Temporary hiring also contracted, but at a slower pace compared to the previous month.
Neil Carberry, the REC’s chief executive, highlighted that the slowdown in the labor market appears to be easing, suggesting that December is a month when employers typically delay activities until the New Year. Carberry viewed this as a positive indication that the labour market remains resilient in the face of current economic challenges.
Despite the moderation in the increase, permanent staff hiring experienced higher wages in December compared to November.
Concerns about inflation are paramount for the Bank of England, which has kept its benchmark interest rate at 5.25 percent since raising it in August. The central bank emphasizes the need for elevated borrowing costs to counter inflationary pressures.
Of particular concern to the Bank of England is the rapid growth in pay, with official data showing wages rose over 7 percent annually in the three months leading up to October.
Investors anticipate that the Bank of England will maintain interest rates at their current level during its next scheduled meeting on February 1, although they are also predicting five rate cuts in 2024.
The REC survey additionally revealed that vacancies declined for the third time in four months, while the number of available candidates to fill positions increased, albeit at a slower pace than the record expansion observed in November, which had lasted for nearly three years.
Approximately 400 recruitment agencies provided responses for the survey, which was conducted between December 6 and December 18.
In conclusion, the UK labor market exhibited signs of improvement in December, with employers offering higher wages and showing renewed interest in hiring. The decline in permanent and temporary worker hiring continued, but at a slower pace, suggesting that the labor market’s slowdown may be easing. Despite this positive trend, concerns about inflationary pressures persist, with the Bank of England keeping a watchful eye on wage growth. Moving forward, analysts expect interest rates to remain unchanged, although there may be rate cuts later in 2024.
Please note: The information provided in this article is based on a survey conducted by the Recruitment and Employment Confederation (REC) and the observations of industry experts. It is important to note that economic trends can be subject to change based on various factors.
