UK wage growth slowed to its slowest pace since 2021 in September

UK wage growth continued to slow in September to its slowest level in three-and-a-half years, according to a survey by the Bank of England.

The Recruitment & Employment Confederation and KPMG report on the situation on Monday (October 7), citing an increase in the number of applicants in the UK but a decrease in the demand for workers, That led to the slowest wage increase for permanent employees since February 2021, while wages for temporary workers plummeted.

A survey by the Centre for Economic Research showed job vacancies shrank in September at the fastest pace since March.

Bank of England policymakers are debating whether to cut interest rates again at their November meeting and are now closely watching wage inflation for signs of persistent price pressures.

The chief executive of the Royal Economic Society, Michael Caberi, said: "Wage growth continues to slow and is now below its long-term trend. This should increase the Bank's willingness to act more aggressively in cutting interest rates, as the governor (Bailey) hinted at last week."

The findings further echo business concerns. The Labor government will present its budget on October 30, and businesses are worried about possible tax increases and spending cuts. Mr Reeves said earlier that the Labour government inherited a £22bn financial black hole from the Conservatives.

Jon Holt, chief executive and senior partner at KPMG UK, said: "The slowdown in hiring in September was expected as firms put hiring on hold ahead of the Budget, waiting for clarity on future tax, business and economic policies.

The number of available workers is rising as companies freeze hiring and lay off more workers. However, the Royal Institute of Chartered Economists points out that there are still talent shortages in some areas of the economy, particularly in high-skilled jobs.

"The job market is waiting for a signal," Kaberi said. Recruiters are indicating that client companies' projects are ready, but confidence is not yet strong enough to move them forward."