Companies hired more staff in April than at any time in the last six months, as concerns over labour shortages and inflation begin to subside.

In April, ten out of the 14 UK sectors monitored by the Bank of Scotland UK Sector Tracker increased headcount – four more than in March, and the highest level since October 2022.

The real estate sector hired at the fastest pace, followed by software and services, as greater availability of labour and stronger expectations of output growth drove recruitment.

Mentions of staff shortages by businesses surveyed by the Tracker fell to a 14-month low.

However, reports of wage pressures increased further during April – a factor that could impact the trajectory of inflation.

Jeavon Lolay, head of economics and market insight at Lloyds Bank Corporate & Institutional Banking, said:“Our report suggests that hiring activity is firming again as, alongside a pick-up in activity levels and improving confidence, many businesses reported that it was easier to recruit staff.

“Nevertheless, while labour availability may have improved, competition for staff is still intense in some industries and rising wages were increasingly cited as a key reason for raising output prices in April. 

“As this was particularly the case for firms in the service sector, where wages typically account for a larger share of costs, economists will continue to focus more closely on inflation trends here to assess whether the Bank of England will hike interest rates again next month.”