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mpc: 7 short-term unemployment (down 90,000). Claimant unemployment had fallen by 58,200 over the three months to August, and by a further 16,400 in September. The working age inactivity rate in the three months to August had been 21.0%, up 0.1 percentage points from March to May. A32 Turning to surveys of labour shortages and recruitment difficulties, the BCC survey for Q3 had shown that recruitment difficulties had again picked up and the Recruitment and Employment Confederation (REC) had reported a continued intensification of shortages of agency staff in October. Shortages of skilled labour in manufacturing had worsened over the past year and in Q3 had returned to levels last seen in 1997, according to the CBI survey. Shortages of unskilled labour in manufacturing had remained subdued. A33 The Bank's regional Agents had conducted a survey of 188 employers on recruitment difficulties and staff turnover. Only 28% of respondents had reported that recruitment difficulties were no greater this year than last year, and many of these explained that recruitment had been problematic for more than a year. Only 3% of firms had expected any improvement in the recruiting situation over the next six months. Staff turnover had been stable over the past year for nearly 50% of respondents, but 40% of firms had reported that turnover had increased. A34 Headline annual earnings growth, as measured by the Average Earnings Index (AEI), had been unchanged at 3.9% in August. Headline earnings growth in manufacturing had fallen by 0.4 percentage points to 4.2%, while private services headline earnings growth had increased by 0.3 percentage points to 3.9%. Actual whole-economy earnings growth in the year to August 2000 had risen by 0.3 percentage points above that in the year to July, to 4.1%. The sharpest increase had been in private services, up 1.0 percentage point to 4.7%, but this series had been volatile with little apparent trend in recent months. In manufacturing, there had been a marked slowdown in the pace of earnings growth since June. The recent pattern of bonus contributions had mainly reflected those paid in private services. Bonuses had made only a small negative contribution of 0.2 percentage points (not seasonally adjusted) in August, substantially smaller than in the previous few months. A35 Results for the 2000 New Earnings Survey (NES) had suggested that earnings of those included in this PAYE-based sample had grown by 2.0% in the year to April 2000, well below the figure of 4.6% annual earnings growth recorded by the AEI for the same period. However, the NES survey did not