UK labour market: Are cracks starting to appear?

Demands of employers in the United Kingdom for staff grew in October at the slowest rate in almost eight years, a survey showed on Friday, underlining suspicions at the Bank of England (BoE) that the labour market may be losing its strength.

A monthly index of job vacancies from the Recruitment & Employment Confederation and global accountancy KPMG fell to 51.7 from 52.6 in September, its lowest level since January 2012.

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On Thursday, two of the BoE’s nine interest-rate setters unexpectedly voted to cut interest rates, citing signs that the labour market – the bright spot of the UK’s economy since the Brexit vote – may now be on the turn.

Friday’s REC report – which is monitored by the BoE – showed permanent job placements fell for the eighth month running and at a faster rate than in September. This chimed with official data that showed job creation waning ahead of the aborted October Brexit deadline.

James Stewart, a vice chair at KPMG UK, said uncertainty around Brexit and a national election scheduled for December 12 had dampened companies’ hiring plans.

“It’s not just businesses that are being cautious, however, and over October, we’ve seen job seekers become increasingly nervous about making a career change,” said Stewart.

The survey showed starting salaries for permanent staff rose at a solid pace in October, albeit more slowly than in September.

In a new set of forecasts for the economy published on Thursday, the BoE said it thought pay growth in the UK – which recently hit a more than 10-year high – was likely to cool off a little in the coming year.