Job creation slows to nine-month low

LONDON (Reuters) - Employment growth slowed to its weakest rate in nine months in July, with the healthcare sector particularly hard hit as public spending cuts began to bite, a survey showed on Wednesday.

A worker sands down a chair in a workshop at Stewart Linford's bespoke furniture makers in High Wycombe, July 2, 2008. REUTERS/Andrew Winning

The KPMG/Recruitment and Employment Confederation (REC) jobs report showed the rate at which recruiters filled permanent vacancies slowed to a nine-month low of 60.2 in July, while temporary hiring also fell to a nine-month low of 54.3.

A figure above 50 represents expansion, and below 50 contraction. The permanent hire index has been declining since March, when it hit a 13-year high of 65.2, but still remains strong by historical standards.

“This month’s data confirms a significant deceleration in the jobs market with the rate of expansion easing to an eight-month low,” said REC Chief Executive Kevin Green, referring to the rate of growth in vacancies.

“This is the first real indicator that cuts in the public sector are beginning to bite,” he added.

Britain’s coalition government has introduced a raft of austerity measures to tackle a bulging budget deficit, and public spending cuts are expected to result in job losses.

The survey pointed to a sharp decline in healthcare professionals, which the authors put down to cost reduction in the National Health Service.

The state-run network of hospitals and clinics, however, is seen as less vulnerable to the steep cuts asked of other state departments ahead of a spending review due in October, which will inform future budgets.

The report’s silver lining was relatively strong demand for engineering and construction staff, and a jump in the rate of salary growth for permanent staff to a near 2 1/2 year high.

On Monday, a survey showed growth in Britain’s manufacturing sector eased slightly in July, while another survey covering the services industry is due to be published at 9:28 a.m.

Reporting by Mohammed Abbas: Editing by Susan Fenton