Bank of England faces pressure to cut rates as job vacancies and factory output decline

By Investor Empires On Sep 16, 2024

The Bank of England is facing increasing pressure to cut interest rates this week as signs of a slowing economy emerge in job vacancies and industrial production.

According to the Recruitment and Employment Confederation, job vacancies fell by 3.2% in August, with nearly 720,000 new advertisements, reflecting a slowing labour market as UK factory output contracted for the first time since late 2020.

Separate data from the UK Manufacturing Industry Federation showed that manufacturers are holding back on hiring amid a slump in industrial output, highlighting broader economic concerns. The contraction marks the first fall in industrial output in four years, adding weight to calls for further interest rate cuts.

The Bank of England’s Monetary Policy Committee is due to meet next Thursday to discuss interest rates. Last month, the committee cut its base rate from 5.25% to 5%, its first cut in four years, as part of efforts to support economic growth. However, Bank of England Governor Andrew Bailey urged caution, warning that interest rates should not be cut too quickly or too sharply to ensure continued progress in reducing inflation.

Despite the economic slowdown, investors now expect the Bank of England to keep interest rates on hold this week. Andrew Bailey’s cautious stance reflects the balance between supporting growth and keeping inflation under control.

REC chief executive Neil Carberry pointed to the wider impact on the labour market, saying: “There is no doubt that the labour market remains sluggish compared to previous years, with the summer holidays also having an impact on the pace of hiring.”

As the UK economy navigates this period of uncertainty, all eyes will be on the Bank of England’s decision and the potential implications for businesses, consumers and the wider economic landscape. The need to sustain progress on inflation is easing pressures for monetary policy easing, making this week’s interest rate decision a crucial moment for the UK’s economic outlook.

Jimmy Young

Jamie is an experienced business journalist and senior correspondent at Business Matters, with over a decade of experience reporting on SMEs in the UK. Jamie has a degree in Business Administration and regularly attends industry conferences and workshops to stay at the forefront of emerging trends. When not reporting on the latest business developments, Jamie is passionate about mentoring journalists and budding entrepreneurs and sharing his wealth of knowledge to inspire the next generation of business leaders.