LONDON, Sept 8 Reuters British employers concerned about the economic outlook reduced the number of workers they hired via recruitment agencies last month at the fastest pace in more than three years, an industry survey showed on Friday.

The Recruitment and Employment Confederation REC, a trade body, said hiring of permanent staff fell by the most since June 2020, early in the COVID19 pandemic, while spending on temporary workers dipped for the first time since July 2020.

For now, the labour market has more slack than it has since the heights of the first lockdown, REC Chief Executive Neil Carberry said though he added there were some signs that employer confidence might improve later this year.

REC also reported that starting salaries rose at the jointslowest pace since March 2021, although this was still a large increase by historic standards.

Friday39;s figures highlight the dilemma for the Bank of England as it tries to judge if the economy is cooling enough to reduce wage growth  which was a record 7.8 in the three months to June to a level that will allow inflation to return to its 2 target.

A BoE survey on Thursday showed employers expect to raise wages by 5 over the coming year, above the 34 rate typical before the pandemic, when inflation stayed close to target.

BoE Governor Andrew Bailey said on Wednesday that the BoE was near the end of its cycle of rate hikes which have taken interest rates from 0.1 to 5.25 in less than two years but it was too…