Introduction: UK starting salaries rise at slowest pace in nearly 3 years
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
UK salary growth is cooling as cautious employers cut back on their hiring plans.
Starting salaries paid to new staff rose at the slowest pace in 32 months in November, the latest poll of recruitment firms from KPMG and REC has shown.
Although there was still competition for candidates with sought after skills, recruitment firms reported that clients were under greater budgetary pressures.
This led to the slowest rise in permanent starters’ pay since March 2021, with starting salary inflation easing in all four monitored English regions, except the Midlands.
REC and KPMG also report that pay for temporary workers rose at the lowest rate in 33 months. Temporary wages actually fell in the North of England, but rose at the fastest pace in London.
That implies the UK labour market is weakening, a blow to workers, but it should cheer the Bank of England as it assesses whether interest rates are restrictive enough to bring down inflation to its 2% target.
Claire Warnes, a partner at KPMG, explains:
“Businesses want to plan for the year ahead, but the prospect of faltering UK economic growth means the certainty they need isn’t there. This is now impacting starting salaries.
Even temp staff billings – which have given much needed flexibility to employers in key sectors such as health & care and IT – are facing some contraction. And with the Bank of England looking like it will be keeping interest rates high for now, businesses will need to stay resilient to manage this period of flux.”
The report also found that hiring slowed again in November, while the number of vacancies dropped for only the second time since February 2021.
This led to the largest rise in available candidates for almost three years. Here’s the full story:
Also coming up today
The US jobs market will also be focus as investors await the final non-farm payroll report of the year. November’s NFP is expected to show a pick-up in hiring, after a lull earlier in the autumn.
US payrolls are expected to have risen by 180,000 jobs, ahead of the 150,000 increase in October.
But wage growth could slow, with average earnings growth tipped to slow to 4% from 4.1%.
The NFP will be closely watched in the markets, as a gauge as to whether America’s central bank has lifted interest rates high enough to cool US inflation and pull off a ‘soft landing’.
The agenda
Key events
There is a great deal of variability in hiring activity across UK regions and sectors, reports Neil Carberry, REC chief executive.
Carberry explains:
The Midlands and the North both saw strong performances for temporary and permanent roles, in sharp contrast with London and the South, with permanent hiring in London especially slow.
The ongoing stronger performance of the private sector on new vacancies is also a notable positive signal.
Carberry also warns that if there is a pick-up in hiring, it will add to the strains on the jobs market due to embedded labour shortages, adding:
…this week’s pro-election rather than pro-economy decision on immigration will exacerbate that.
Any return to growth could drive domestically-generated inflation unless we adopt a proper plan for workforce capacity, embracing better welfare-to-work support, finally reforming the Apprenticeship Levy, funding Further Education properly and the kind of support for school leavers suggested by today’s Broken Ladders report from EDSK and REED on the school-to-work transition.”
Introduction: UK starting salaries rise at slowest pace in nearly 3 years
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
UK salary growth is cooling as cautious employers cut back on their hiring plans.
Starting salaries paid to new staff rose at the slowest pace in 32 months in November, the latest poll of recruitment firms from KPMG and REC has shown.
Although there was still competition for candidates with sought after skills, recruitment firms reported that clients were under greater budgetary pressures.
This led to the slowest rise in permanent starters’ pay since March 2021, with starting salary inflation easing in all four monitored English regions, except the Midlands.
REC and KPMG also report that pay for temporary workers rose at the lowest rate in 33 months. Temporary wages actually fell in the North of England, but rose at the fastest pace in London.
That implies the UK labour market is weakening, a blow to workers, but it should cheer the Bank of England as it assesses whether interest rates are restrictive enough to bring down inflation to its 2% target.
Claire Warnes, a partner at KPMG, explains:
“Businesses want to plan for the year ahead, but the prospect of faltering UK economic growth means the certainty they need isn’t there. This is now impacting starting salaries.
Even temp staff billings – which have given much needed flexibility to employers in key sectors such as health & care and IT – are facing some contraction. And with the Bank of England looking like it will be keeping interest rates high for now, businesses will need to stay resilient to manage this period of flux.”
The report also found that hiring slowed again in November, while the number of vacancies dropped for only the second time since February 2021.
This led to the largest rise in available candidates for almost three years. Here’s the full story:
Also coming up today
The US jobs market will also be focus as investors await the final non-farm payroll report of the year. November’s NFP is expected to show a pick-up in hiring, after a lull earlier in the autumn.
US payrolls are expected to have risen by 180,000 jobs, ahead of the 150,000 increase in October.
But wage growth could slow, with average earnings growth tipped to slow to 4% from 4.1%.
The NFP will be closely watched in the markets, as a gauge as to whether America’s central bank has lifted interest rates high enough to cool US inflation and pull off a ‘soft landing’.
