By Suban Abdulla
LONDON (Reuters) – Britain’s jobs market cooled in February as the pace of hiring slowed and starting salaries rose by the least in four years, according to a survey on Monday that underscores firms’ concerns about higher employment costs and a soft economy.
The Recruitment and Employment Confederation said its measure of growth in starting pay for people hired to permanent roles hit its lowest since February 2021.
Appointments to permanent jobs declined for the 29th month in a row, but the drop in hiring was smaller than in January.
“While it is still a wait and see approach to hiring … the softer decline could be an indication that expectations of further interest rate cuts and better than expected recent economic data are starting to release some of the pressures on business,” Jon Holt, chief executive of KPMG, which sponsors the survey, said.
The number of available candidates for roles rose sharply, similar to in 2024, while the number of vacancies fell for the 16th month in a row.
The Bank of England, which is expected to hold interest rates at 4.5% next week, is monitoring wage growth, and expects private-sector pay to slow to around 3.75% in late 2025 from over 6% in the final quarter of last year.
A separate survey published on Monday by data provider Incomes Data Research showed that the median pay settlement awarded by major employers in the private sector held at 4.0% in the three months to January.
Overall pay settlements, which the BoE views as having a less direct influence on future inflation, fell to 3.5% from 4%.
“The whole economy median may rise again by April due to the influence of the forthcoming uplift in the National Living Wage and the uptick in inflation could also play a role,” Zoe Woolacott, senior researcher at IDR, said.
Britain’s minimum wage is due to rise 6.7% in April while inflation rose to a 10-month high of 3% in January and the BoE forecast it will reach 3.7% later this year.
IDR’s survey was based on 68 awards between November 1, 2024 and January 31, 2025 covering 300,000 employees. The REC/KPMG report covered around 400 companies who were surveyed between February 10 and February 24.
(Reporting by Suban Abdulla; editing by David Milliken)
