UK jobs market in ‘dramatic freefall’ following Brexit vote

The number of people being hired for permanent positions in the United Kingdom slumped the most in seven years in July, putting the jobs market in a "dramatic freefall".

An index of permanent positions dropped to 45.4 from 49.3 in June, Markit and the Recruitment and Employment Confederation(REC) said on Friday.

That’s below the key 50 level and marks the weakest reading since May 2009.

The report provides a fresh indication that the UK's decision to leave the European Union will hold back economic growth, the day after the Bank of England said that the outlook had weakened "markedly".

On Thursday, the central bank cut interest rates to a record low and unleashed a package of measures aimed at supporting the economy.

"The sharp fall in placements suggests that businesses are highly cautious about committing to new hires," said REC chief executive Kevin Green. "Economic turbulence following the vote to leave the EU is undoubtedly the root cause."

Markit’s measures of services, construction and manufacturing activity all fell below 50 last month, indicating contraction, while surveys of confidence have also deteriorated since the Brexit vote in June.

The Bank of England forecast this week that the unemployment rate would rise to 5.6 per cent from 4.9 per cent over the next two years.

Mr Green said that while there were “worrying signs,” the long-term consequences of the referendum were not certain.

He said the Bank of England’s “sensible decisions” may help revive confidence in the jobs market. – (Bloomberg)