Market Analysis

In May, the decline in permanent hiring by employers in Britain was the smallest in over a year, signaling a potential recovery in the recruitment market, according to an industry survey released on Monday.

The Recruitment and Employment Confederation (REC) reported that the decrease in permanent hiring was the smallest in 14 months, a development closely monitored by the Bank of England (BoE) as it considers when to begin lowering interest rates.

Billings for temporary staff experienced the least drop since January.

"The job market appears to be on the mend, with notable improvements over last month in most key measures," said REC Chief Executive Neil Carberry.

While the REC survey has generally depicted a weaker labor market than official data, broader statistics showed a 6% annual wage growth in the first quarter of 2024.

Carberry noted that the upcoming national election on July 4 and the anticipated interest rate cuts by the BoE later this year could reduce employers' reluctance to hire.

"These figures indicate that caution might be starting to diminish," he said.

The REC also noted that pay rates for permanent staff increased at a slightly slower pace than April's four-month high. Meanwhile, vacancies fell at the slowest rate in a seven-month decline.

Potentially easing concerns for the BoE, the availability of staff grew at the fastest rate since December 2020, driven by a combination of redundancies, higher unemployment, and reduced demand for staff.

The BoE is closely monitoring the labor market to determine when inflationary pressures have sufficiently decreased to justify cutting borrowing costs for the first time since the onset of the coronavirus pandemic over four years ago.

Paraphrasing text from "Reuters" all rights reserved by the original author.