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UK DATA: KPMG-REC Report on Jobs: Nothing really positive in this report

UK DATA
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The KPMG-REC Report on Jobs showed continuing falls in recruitment, further slowdown in salary growth and falling vacancies - all pointing to a softening labour market.

  • Permanent staff placements continued to decline, albeit with marginally less of a decline in September than August while temporary placements fell at their fastest pace since April. These data corroborate last week's DMP data which showed that in the single month of September realised employment growth was 0%Y/Y - the first time it had not been positive since August 2021.
  • Pay inflation for permanent staff fell for the third consecutive month, with the diffusion index falling to its lowest level since February 2021. The report notes that there were greater numbers of candidates for each position, which has helped cap pay inflation, although there remains some shortages in some sectors. Temporary wages marginally declined - the first time in three and a half years there wasn't wage inflation for temporary workers.
  • Vacancies continued to decline, at the steepest pace since March.
  • Overall, there are no real positives for the labour market in this report - perhaps other than uncertainty is higher amongst employers ahead of the Budget, suggesting there could possibly be some increase in hiring when the fiscal situation is more certain.
  • Wage growth slowing at a faster pace due to a softening labour market outlook will be one of the factors being watched closely by the MPC - and is likely to be a prerequisite for more "activist" policy, as Bailey said was an option last week.
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The KPMG-REC Report on Jobs showed continuing falls in recruitment, further slowdown in salary growth and falling vacancies - all pointing to a softening labour market.

  • Permanent staff placements continued to decline, albeit with marginally less of a decline in September than August while temporary placements fell at their fastest pace since April. These data corroborate last week's DMP data which showed that in the single month of September realised employment growth was 0%Y/Y - the first time it had not been positive since August 2021.
  • Pay inflation for permanent staff fell for the third consecutive month, with the diffusion index falling to its lowest level since February 2021. The report notes that there were greater numbers of candidates for each position, which has helped cap pay inflation, although there remains some shortages in some sectors. Temporary wages marginally declined - the first time in three and a half years there wasn't wage inflation for temporary workers.
  • Vacancies continued to decline, at the steepest pace since March.
  • Overall, there are no real positives for the labour market in this report - perhaps other than uncertainty is higher amongst employers ahead of the Budget, suggesting there could possibly be some increase in hiring when the fiscal situation is more certain.
  • Wage growth slowing at a faster pace due to a softening labour market outlook will be one of the factors being watched closely by the MPC - and is likely to be a prerequisite for more "activist" policy, as Bailey said was an option last week.