Britain's labour market cooled in January as pay growth in new permanent jobs eased to the lowest level in almost three years, according to a survey that might boost Bank of England officials' confidence that inflation pressures are subsiding.
The monthly gauge of permanent staff salaries from the Recruitment and Employment Confederation trade body and accountants KPMG fell to 55.8 from 56.5 in December, its lowest reading since March 2021.
While readings above 50 denote growth, it was some way below the survey's pre-pandemic average of 56.7.
The findings are likely to interest BoE officials, who voted this month to keep interest rates at 5.25% and indicated that the time to start cutting rates was getting nearer.
On Wednesday BoE Deputy Governor Sarah Breeden said indicators of wage growth were critically important to the outlook for interest rates.
REC's gauge of permanent staff placements also eased in January.
"Pay has normalised, inflation is dropping and the hiring market has been cooling for a year now - it's high time that the Bank of England starts releasing the brake pedal on our economy," Neil Carberry, REC chief executive, said.
Doubts surrounding the quality of official measures of the labour market have made judging the outlook for inflation and the economy more difficult for the BoE.
On Monday, the Office for National Statistics put the unemployment rate at 3.9% in the three months to November, based on new estimates of Britain's population, down from an earlier figure of 4.2% based on different sources of data.
But the ONS' data for average weekly earnings, which are not subject the same concerns as the employment figures, show growth in pay has slowed sharply over the last few months.
