More Gloom for U.K. Job Market

The U.K. job market deteriorated at its fastest rate in more than two years in November, and prices of shop-bought goods eased, two private surveys showed, reflecting the plunge in consumer confidence that has undermined U.K. growth.

The gloom was underscored by a poll showing seven out of 10 Britons expect this Christmas to be tougher financially than last year.

A survey by the Recruitment and Employment Confederation and financial services group KPMG, published Wednesday, showed, the number of people placed in permanent jobs by recruitment agencies fell at its fastest rate since July 2009.

The seasonally adjusted index of job placement fell to 48.2, below the 50 threshold that separates growth from contraction for the second straight month. Further, the number of vacant positions grew at its slowest rate in 25 months.

"This month's report on jobs makes grim reading," said Bernard Brown, partner and head of Business Services at KPMG.

"Given the uncertainties of the European market, the government's recent stimulus package could not have come sooner, as unemployment creeps ever higher," he said.

The latest official figures showed 2.6 million Britons were unemployed in October, the highest total since 1994 and equivalent to 8.3% of the workforce.

Households' fears on job security, and high inflation, have pushed down on consumer spending—prompting businesses to cut staff further. The government is expected to cut some 700,000 jobs within five years' time—putting further pressure on consumer spending.

A poll by broadcaster ITV PLC and pollsters ComRes, published late Tuesday, found 70% of 2,031 Britons surveyed expect the holiday season this year to be harder to cope with financially than 2010. Just 23% disagreed, while among the poorest households the percentage expecting this year to be tougher rose to 75%.

In another sign of falling consumer demand, prices of shop-bought goods in November rose at their slowest rate in a year. A supermarket price war and widespread pre-Christmas discounts have pushed down on shop inflation as businesses struggle to get consumers to spend.

The British Retail Consortium said shop prices rose an annual 2.0% in November, down from 2.1% in October and the lowest rate since November 2010.

"Inflationary pressures are easing," said Stephen Robertson, BRC director general, who predicted further declines to come. "Cheaper commodities will help retailers keep prices down," he said.

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