U.K. job growth hits 7-month low

Employers across all sectors more cautious with hiring
By Peter Griffiths
|hrreporter.com|Last Updated: 06/09/2011

(Reuters) — Recruiters in the United Kingdom filled permanent and temporary vacancies at the slowest pace in seven months in May, a survey showed on Wednesday, adding to worries about the strength of the economic recovery.

Research for the Recruitment and Employment Confederation (REC) and accounting firm KPMG showed private sector job creation slowed at a time when the government hopes companies will pick up the slack left by public cuts.

The figures will fuel fears that the economic recovery is struggling to gather pace in the second quarter after output stagnated over the previous six months.

Most economists expect the Bank of England to hold off raising interest rates from a record low of 0.5 per cent until near the end of the year.

"The latest data shows a worrying deceleration in the U.K. jobs market," said Kevin Green, REC chief executive. "Private sector job creation has not hit the buffers, but it is clearly slowing which heightens concerns over whether public sector job losses can be absorbed."

The government has embarked on a round of deep public spending cuts and tax rises to slash a budget deficit that peaked at around 11 per cent of output in 2009-2010.

While there are signs that employers in some sectors are more confident, growth is still too fragile to give the jobs market the boost it needs, said Green.

Permanent staff salaries rose in May, but the rate of inflation eased to a three-month low. Temporary staff pay growth eased to its lowest level since January.

Bernard Brown, head of business services at KPMG, said the results showed a "marked slowdown" in Britain's jobs market.

"Employers across all sectors are becoming more cautious about hiring new staff," he said. "With businesses and consumers now being hit by higher taxes and fuel costs, public spending cuts and a continuing squeeze on real incomes, this is perhaps no surprise."

The survey of 400 recruitment firms chimes with a run of generally cheerless U.K. economic news in recent days.

Retail sales fell unexpectedly in May, house prices dropped at the sharpest annual rate in 18 months and PMI surveys last week showed growth in the dominant services sector was at a three-month low.

The International Monetary Fund's acting head John Lipsky said on Monday that U.K. unemployment was "unacceptably high".

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