UK pay growth weakest since February 2021, REC survey show

LONDON (Reuters) – Britain’s jobs market showed more signs of cooling in September as pay growth increased at the slowest pace in almost four years, according to a survey likely to reassure the Bank of England as it considers whether to cut borrowing costs again.

The Recruitment and Employment Confederation and KPMG said on Monday their measure of growth in starting pay for people hired to permanent roles hit its lowest since February 2021.

Its monthly permanent job placements index extended a two-year downturn but the drop in hiring was softer than in August.

Jon Holt, KPMG’s UK chief executive and senior partner, said companies faced uncertainty about Britain’s tax and other economic policies ahead of finance minister Rachel Reeves’ inaugural annual budget on Oct. 30.

Reeves has warned that some taxes could increase as Prime Minister Keir Starmer’s new Labour government seeks to boost public services and investment.

Holt said the easing in pay pressures “could strengthen the case for a further cut in interest rates” at the BoE’s next meeting in November.

Last week BoE Governor Andrew Bailey said the central bank could become “a bit more activist” and move more aggressively to cut rates if inflation pressures continued to weaken.

But the central bank’s Chief Economist Huw Pill struck a more cautious tone on Friday, saying he preferred a gradual approach.

The REC/KPMG survey also showed that the number of available candidates for roles continued to grow, while the number of vacancies fell for the 11th month in a row and at the fastest pace since March.