UK Hiring Slows Amid Economic Concerns: REC Survey Reveals

Summary

  • The Recruitment and Employment Confederation (REC) survey reveals a reduction in the hiring of permanent workers due to economic concerns.
  • There was a slight increase in temporary hiring and pay for new hires in both permanent and temporary roles in December.
  • The Bank of England (BoE) maintains a 15-year high interest rate due to inflation pressure and concerns about excessive pay growth.
  • The availability of candidates for jobs increased at a slower pace in December, while job vacancies showed a decline.

Hiring Trends According to REC’s Survey

On Monday, a study conducted by the Recruitment and Employment Confederation (REC) demonstrated a continued decline in the recruitment of permanent employees, attributed to economic anxieties. However, this decline was less pronounced in comparison to November.

Similarly, temporary hiring decreased but at a lesser rate, indicating a slight relaxation in the labour market downturn.

Signs of Recovery?

In the words of Neil Carberry, CEO of REC, “The deceleration in employment seems to be lessening. This is an encouraging indicator that despite prevailing economic challenges, our job market is demonstrating resilience.”

Salary Expectations for New Hires

As per the REC survey, salaries for freshly hired staff, both permanent and temporary, increased at a faster rate in December than the previous month, despite the rate for permanent staff being the second weakest since March 2021.

BoE’s Stance on Interest Rate and Pay

Since August, the BoE has maintained its key interest rate at a 15-year peak of 5.25%, warning that due to inflationary pressures, borrowing costs may need to remain heightened for an extended duration. The central bank expressed concern over the annual pay growth rate of approximately 7%.

Future Expectations

Investors expect the BoE to maintain the current interest rate until its meeting on 1st February, anticipating five rate cuts across 2024.

Labour Supply and Demand

According to the REC, there is reduced demand, with job vacancies dropping for the third time in four months. However, the pool of available job candidates expanded, albeit at a slower pace than in November.

About 400 recruitment agencies provided information for this survey, collected between December 6 and December 18.

These economic dynamics and the central bank’s actions can significantly impact forex trading, with the GBP likely to be influenced by interest rate changes.

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