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British businesses have the joint weakest hiring intentions since 2020 and expect the fastest consumer price inflation since early 2024, according to a Bank of England survey on Thursday which highlights the challenges facing the central bank.
The monthly survey showed that businesses in the three months to September expected to keep employment steady over the next 12 months, the first time since January that they had not expected to increase staffing. Prior to that, such a reading had not been recorded since 2020.
More volatile single-month data showed expectations for a 0.5% rise over the next 12 months after a 0.5% drop in August.
Official tax data has shown falling numbers of employees for the past seven months while the unemployment rate – which is based on a survey with long-standing problems – has risen to its highest since 2021 at 4.7%.
BoE policymakers are hoping that a weaker labour market will reduce the pace of wage growth and help bring down inflation, which the central bank forecast to hit 4% in September, double its target.
But Rob Wood, chief UK economist at Pantheon Macroeconomics, said the survey results were likely to reinforce policymakers’ caution about cutting interest rates further this year.
“Wage and price pressures remain stubborn, recruitment difficulties slightly worsened despite weak employment and firms’ inflation expectations rose,” he said.
Businesses in the BoE’s September Decision Maker Panel survey saw consumer price inflation rising by 3.4% over the next 12 months, the same expected rate as in August.
Three-month average expectations showed expected inflation for the coming year of 3.4%, the most since February 2024, while businesses said they planned to raise their own prices by 3.7%, unchanged from their plans in the three months to August.
(Reporting by David Milliken; editing by Sarah Young and Suban Abdulla)
