UK wage growth is the weakest since February 2021, Reuters’ REC survey shows

LONDON (Reuters) – Britain’s labor market showed more signs of cooling in September as wage growth rose at the slowest pace in nearly four years, according to a survey that could reassure the Bank of England as it considers reduce borrowing costs again.

The Employment and Recruitment Confederation and KPMG said on Monday that their measure of starting pay growth for people employed in permanent roles had hit its lowest level since February 2021.

The monthly index of permanent jobs extended a two-year decline, but the decline in hiring was milder than in August.

Jon Holt, KPMG’s UK chief executive and senior partner, said companies were grappling with uncertainty over UK tax and other economic policies ahead of Chancellor of the Exchequer Rachel Reeves’ inaugural annual budget on 30 October.

Reeves warned that some taxes could rise as Prime Minister Keir Starmer’s new Labor government tries to boost public services and investment.

Holt said easing wage pressures “could strengthen the case for a further rate cut” at the BoE’s next meeting in November.

Last week, BoE Governor Andrew Bailey said the central bank could become “a bit more activist” and act more aggressively to cut rates if inflationary pressures continue to ease.

But the central bank’s chief economist, Huw Pill, struck a more cautious tone on Friday, saying he preferred a gradual approach.

The REC/KPMG survey also showed that the number of candidates available for roles continued to rise, while the number of vacancies fell for the 11th consecutive month and at the fastest pace since March.