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March's survey from the Recruitment and Employment Confederation
may help convince Bank of England policymakers that underlying
pay pressures in the economy are easing sufficiently to keep
inflation at its 2% target.
Official measures of pay growth have been rising at an annual
rate of around 6%, roughly double the pace most BoE officials
think is consistent with on-target inflation.
"The data here should support a decision by the Bank of
England's Monetary Policy Committee to loosen its grip on growth
in the near-term future. Pay growth has slowed significantly,
and is now below the survey's long-term average for new
permanent roles," REC Chief Executive Neil Carberry said.
However, the BoE has been reluctant to put too much weight on
REC data in recent months, as the trends it has shown in the
recruitment market have been slow to translate into lower wage
growth for the broader workforce.
Last week a BoE survey of employers showed firms expected to
raise pay by 4.9% over the next 12 months.
Financial markets predict the BoE will start cutting rates in
June or August, with nearly 0.75 percentage points of cuts
priced in for 2024.
REC said overall demand for staff fell for a fifth month in a
row in March, and by almost as much as in February, when demand
dropped by the most in more than three years.
Downward pressure on pay was caused by a greater supply of
candidates, partly because of increased redundancies, it added.
REC's data is based on a survey of around 400 recruitment
agencies between March 12 and March 22.
(Reporting by David Milliken, editing by Andy Bruce)
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