Recruiters see weakest demand since 2001

LONDON (Reuters) - Recruiters reported the weakest job market for permanent employees since October 2001 in September and highlighted the extent to which a slowing economy was keeping wage inflation subdued.

The KPMG/REC Report on Jobs said on Wednesday that permanent staff salaries were unchanged in September for the first time in over five years of growth -- something that may ease the Bank of England's inflation worries as it contemplates whether to cut interest rates on Thursday.

The permanent placements index fell to 41.2 from August's 41.5, the fastest slowdown since October 2001, while billings for temporary workers fell to 45.3 from 46.4, the fastest contraction since the survey began 11-years ago.

"The rapidly worsening economic outlook is now really starting to bite in the jobs market with temporary and permanent appointments dropping rapidly," said Kevin Green, chief executive of the Recruitment and Employment Confederation (REC), which represents 8,000 recruitment agencies.

The government should scrap plans to abolish a value-added tax exemption for recruitment services, which saves employers 400 million pounds a year, Green added..

(Reporting by David Milliken; Editing by Victoria Main)