UK labour market loses steam in August, recruiters say

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(Reuters) – Britain’s labour market cooled noticeably last month as job placements fell sharply and pay growth slowed, according to a survey of recruiters on Monday that could bolster the case for interest rate cuts from the Bank of England.

The monthly Report on Jobs from the Recruitment and Employment Confederation trade body and accountants KPMG showed permanent job placements dropped at the fastest pace in five months.

Starting pay growth for permanent staff also fell to a five-month low, one of the weakest readings since early 2021.

Jon Holt, KPMG’s UK chief executive and senior partner, said business confidence continued to fluctuate, despite an interest rate cut from the BoE last month.

“The news that while salaries rose last month it was at the weakest rate since March could help make the case for more rate cuts when the Monetary Policy Committee meets to decide the future path of interest rates,” Holt said.

The vast majority of economists polled by Reuters think the BoE will wait until November to reduce interest rates again, although financial markets currently show a one-in-four chance of a rate cut on Sept. 19.

Official labour market data on Tuesday are expected to show robust employment growth and a further moderation in pay growth.