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Britain’s labor market cooled sharply and the number of people available for work jumped at the fastest pace since the COVID-19 pandemic, according to data that is likely to back up the Bank of England’s plan to stay on its interest rate-cutting path.
The Recruitment and Employment Confederation and accountants KPMG said on Monday that their index of staff availability rose to 66.1 in June from 63.3 in May, the highest reading since November 2020. A reading above 50 represents growth.
The survey is watched by Bank of England officials, who are increasingly relying on unofficial gauges of the labor market because of problems with some official data. The BoE is expected to cut rates next month for the fifth time since last August.
Governor Andrew Bailey said in an interview with the Times published late on Sunday that the BoE was sticking to its gradual and careful approach to cutting rates as it juggled the drop in employment with still-high inflation.
“If we saw the slack opening up much more quickly, that would lead us to a different conclusion,” he said.
Only the pandemic, the global financial crisis of 2008-09 and the immediate aftermath of the Sept. 11 attacks in the United States have resulted in faster growth in job market slack in the REC and KPMG report.
They said the latest readings reflected unusually high levels of uncertainty rather than a sudden downturn in Britain’s economy.
“Ongoing geopolitical turbulence and the threat of rising costs, alongside the promise of technology efficiencies, mean companies continue to wait and see with their hiring,” said Jon Holt, group chief executive at KPMG.
Starting pay for new recruits and demand for staff cooled, adding to signs that the labor market is losing momentum.
Figures due out from the Office for National Statistics on Thursday are expected to show a similar slowdown in pay growth.
British economic growth contracted unexpectedly in May, according to official data published last week.
While U.S. President Donald Trump remains unpredictable on his approach to trade tariffs, last month’s publication of the British government’s industrial strategy might increase certainty among companies’ hiring plans, Holt said.
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(Reporting by Andy BruceEditing by William Schomberg and Kevin Liffey)
