UK labour demand grows at slowest pace in 16 months: REC

BRITAIN'S labour market grew at the slowest pace in 16 months, suggesting the rapid hiring spree following the pandemic is starting to give way to more normal trends, a survey showed.

S&P Global said its index tracking demand for permanent staff fell to 54.8 in June from 59.2 the month before. The number of job vacancies grew at the slowest pace in 15 months.

"We are likely to be past the peak of the post-pandemic hiring spree," said Neil Carberry, chief executive officer of Recruitment and Employment Confederation (REC), which contributed to the report. "Part of the reason for unpredictability in the market is a slower economy accompanied by severe labour and skills shortages."

The figures indicated some easing in upward pressure on wages, with starting salaries growing at the slowest pace in 10 months. Bank of England policymakers are watching the labour market for signs that inflation, which is rising at the strongest rate in 4 decades, is starting to seep into pay demands.

The S&P report with REC and the consulting firm KPMG UK showed the labour market remains strong, underpinned with a lack of skilled workers to fill jobs. At the same time, there's signs that the jobs market is starting to loosen.

"The fluctuations in demand for permanent and temporary workers in some sectors may be showing a sustained downward trend, as it becomes clear that current economic pressures are impacting employers' confidence to grow," said Claire Warnes, head of education, skills and productivity at KPMG UK.

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The pool of available labour declined further in the past 3 months. S&P's index of staff availability fell to 34.1 in June from 35 in May.

Temporary staff availability also fell, partly due to a drop in the number of foreign workers. Recruiters said employers have a preference for hiring permanent staff.

London had the sharpest increase of temporary placements. Hotels and catering, IT and computing and nursing had the most vacancies for staff. BLOOMBERG