By Suban Abdulla
LONDON (Reuters) - British employers cut their hiring of permanent staff via recruitment firms for the first time in nearly two years in October as the country's political upheaval added to concerns about the economy, a survey showed on Thursday.
With the Bank of England now warning of the risk of the longest recession in at least a century, permanent placements fell for the first time since February 2021, the Recruitment and Employment Confederation (REC) said.
Hiring of temporary workers stagnated and wage growth for permanent new staff was its weakest in a year and a half.
The mood among employers was impacted by the political chaos after former prime minister Liz Truss's government announced a string of unfunded tax cuts that triggered a bond market sell-off and led to Truss's resignation last month.
"The economic and political uncertainty of September and October has caused employers to become more cautious in their approach to hiring than during the frenzy of earlier in the year," REC Chief Executive Neil Carberry said.
"We will need to watch how this story develops over months to come, but so far this data suggests heightened employer caution, not a retreat from the market."
The REC/KPMG survey showed growth in vacancies slowed for the sixth consecutive month and demand for staff was the weakest since February 2021.
The availability of workers to fill jobs fell at its slowest pace since April 2021, adding to signs that Britain's tight labour market is losing some of its heat.
But permanent staff availability remained an acute problem for employers with workers less likely to switch roles or seek new jobs, REC said.
Starting salaries increased at the slowest pace in 18 months and temporary pay growth was the weakest since May 2021.
The BoE is watching pay growth closely as it assesses how much further it needs to raise interest rates to stop the recent surge in inflation to above 10% from becoming a more permanent problem in the economy.
The BoE hiked rates by 75 basis points to 3% last week even as it warned that the economy might not grow until 2024 if borrowing costs go up by as much as markets have been pricing.
The REC survey was conducted between Oct. 12 and Oct. 25, a period that included the date of Truss announcing that she would resign as prime minister on Oct. 20.
(Reporting by Suban Abdulla; Editing by William Schomberg)