U.K. Starting Salaries Rise as Labor Shortages Intensify

(Bloomberg) -- U.K. starting salaries rose steeply last month as employers struggled to fill job openings amid the lowest unemployment since the 1970s, a report published Wednesday showed.

Vacancies soared but a shortage of candidates meant firms added permanent staff at the weakest pace since October, according to IHS Markit and the Recruitment and Employment Confederation. Pay rates increased across the board, with the summer heatwave boosting demand for temporary shop workers.

The findings help to explain why the Bank of England increased interest rates last week. Policy makers believe inflationary pressures are building in a labor market where little if any slack remains and wage growth is forecast to continue accelerating.

The private sector remains eager to hire, even as Brexit and rising global trade tensions weigh on sentiment. A poll carried out by IHS Markit in June found that the net balance of firms expecting to add workers was slightly down from February but still above the European Union average.

Uncertainty about the economic outlook also led some people to become more
cautious toward taking up new roles, it found.

To contact the reporter on this story: Karoliina Liimatainen in London at kliimataine1@bloomberg.net

To contact the editors responsible for this story: Paul Gordon at pgordon6@bloomberg.net, Andrew Atkinson, David Goodman

©2018 Bloomberg L.P.