A recent survey conducted by the Recruitment and Employment Confederation (REC) and KPMG has revealed further signs of cooling in the UK job market. The findings, which will be crucial for the Bank of England's deliberations on future interest rate adjustments, indicate a continued downturn in permanent hiring and a deceleration in pay increases.
The survey, carried out between July 11 and July 25, 2024, shows that while the decline in permanent hiring has persisted for nearly two years, the rate of decrease was less pronounced compared to the previous month. Concurrently, pay increases for permanent positions were more modest than in June.
For temporary staff, the situation appears more challenging, with pay growth reaching its lowest point in approximately three and a half years. This trend aligns with the broader economic context, including the Bank of England's recent decision to cut interest rates for the first time since 2020 on August 1, 2024.
Jon Holt, chief executive of KPMG in the UK, commented on the findings:
"Businesses may be cautious to hit go on their full recruitment and investment strategies until they have heard more from the Chancellor in her Autumn Budget"
This statement reflects the anticipation surrounding the upcoming Autumn Budget, scheduled for October 30, 2024, to be presented by Rachel Reeves, the Chancellor of the Exchequer.
The survey results come in the wake of the July 4, 2024 election victory by the centre-left Labour Party, adding a layer of political context to the economic landscape. As the Bank of England continues to monitor pay growth as a key indicator of inflationary pressures, these findings will likely play a significant role in shaping future monetary policy decisions.
It's worth noting that the UK job market has faced numerous challenges in recent years, including the impact of Brexit and the COVID-19 pandemic. The introduction of the furlough scheme during the pandemic helped support employment, but the current trends suggest a shifting landscape as the economy adapts to new realities.
The growth of the gig economy and the trend towards more flexible and remote work arrangements in the UK may also be influencing these employment patterns. As businesses and workers navigate these changes, the upcoming Autumn Budget will be closely watched for potential measures to stimulate job growth and economic recovery.