British employers raised pay and recovered some of their appetite for hiring in December, according to a survey that the Bank of England may see as another sign of lingering inflation pressure in the labour market.

The Recruitment and Employment Confederation (REC) survey published on Monday showed hiring of permanent workers continued to shrink last month as employers worried about the economy, but less severely than in November.

Temporary hiring also contracted by less than in November but the difference was less marked.

"The slowdown in our labour market seems to be easing a bit," Neil Carberry, the REC's chief executive, said. "Given that December is a time when employers generally postpone activity into the new year, this is a positive sign that the labour market is weathering the current economic storm."

Pay for new hires in permanent and temporary roles grew more quickly in December than in November although the increase for permanent staff was the second weakest since March 2021.

The BoE raised its benchmark interest rate to a 15-year high of 5.25% in August and has held it there since, saying borrowing costs are likely to need to stay elevated for "an extended period" to snuff out inflation pressures in the economy.

The central bank is particularly worried about excessive growth in pay, which official data shows rose at an annual rate of just over 7% in three months to the end of October.

The BoE is expected to keep interest rates unchanged on Feb. 1 after its next scheduled meeting. But investors are betting on five rate cuts during 2024.

The REC survey showed vacancies fell for the third time in four months and the availability of candidates to fill jobs grew again, albeit at a slower pace than November's nearly three-year record expansion.

The survey was based on responses from around 400 recruitment agencies collected from Dec. 6 to Dec. 18.

(Reporting by William Schomberg; editing by David Milliken)