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(Bloomberg) — The UK jobs market is showing signs of moving past a slump induced by the conflict in the Middle East, according to survey watched by rate setters at the Bank of England.
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Hiring fell only marginally in June as employers started new projects, the survey by the Recruitment & Employment Confederation and KPMG found. An indicator of permanent placements returned to levels seen before the Iran war, demand for temporary staff surged and pay growth accelerated.
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Optimism about the economic outlook was boosted last month after the US and Iran signed a truce that sent oil prices plunging. The breakthrough appears to have given some firms the confidence to pursue expansion plans, albeit tentatively, a picture that also emerged in a BOE poll of chief financial officers last month.
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“It’s encouraging to see some of the hiring data improve in June” after the energy shock triggered by the Iran conflict “put a pause on active recruitment for many companies,” said Lisa Fernihough, vice chair of advisory at KPMG UK.
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BOE officials are closely monitoring the jobs picture as they weigh whether to maintain interest rates to support a still-fragile economy or raise them to guard against inflationary knock-on effects from the war. With inflation now expected to peak at a lower level than previously feared, traders expect rates to stay at 3.75% for now.
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The REC survey provides some early signs of pay pressures. Recruiters said starting salaries rose at the fastest pace since January as employers compete for top talent. However, the growth rate remained below the survey’s historical average.
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Vacancies declined at the sharpest pace since January, driven by permanent postings. The steepest drops were recorded in sectors like retail and hospitality. Cautious firms meanwhile continued to favor short-term workers and contracts, with temporary appointments rising at the sharpest pace since 2023.
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REC Chief Executive Neil Carberry said the survey showed “truly hopefuls signs” but that employers still lacked the confidence “to commit to larger-scale permanent hiring.”
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