The Office for National Statistics (ONS) has reported that job vacancies in the UK have fallen to their lowest level in over five years, as companies reduce hiring amid economic uncertainty and rising wage costs.
Vacancies Drop Across Key Sectors
According to the ONS, vacancies declined by 19,000 quarter-on-quarter to 707,000 in the three months to May, marking the lowest figure since the three months to April 2021. The decrease was particularly notable in lower-paying sectors such as retail and hospitality, as well as among smaller employers. The largest fall was observed in professional services.
Unemployment Edges Lower
The unemployment rate for the three months to April dipped to 4.9%, down from 5% in the previous quarter. However, the number of workers on payrolls fell by 53,000 in April to 30.3 million. A more timely flash estimate indicated a rise of 2,000 in May, though the ONS cautioned that this figure is subject to revision.
Wage Growth Steady
Wage growth remained unchanged at 3.4% in the three months to April, after recently easing. When adjusted for Consumer Prices Index inflation, wages rose by 0.3%, still outpacing inflation.
Bank of England Decision Looms
The data comes ahead of the Bank of England's interest rate decision on Thursday, with policymakers widely expected to hold rates at 3.75%.
Expert Commentary
Liz McKeown, ONS director of economic statistics, noted: “The labour market remained broadly stable in the latest quarter, with further softening evident in some measures. Payroll numbers continued to fall over this period, with new recruits at their lowest level in five years.” She added that there were signs of workers moving into self-employment and that the decline in vacancies indicated firms are becoming more cautious about hiring.
The ONS attributed the vacancy decline to economic uncertainty and higher labour costs, including the Government's increase in employer National Insurance Contributions and above-inflation rises in the minimum wage. On Wednesday, AO World blamed its decision to offshore hundreds of jobs on these increased staff costs.
Employee-heavy sectors like retail and hospitality have been particularly affected. On an annual basis, wholesale and retail trade saw the largest vacancy fall, down 13,000 in the three months to May, while hospitality recorded a 10,000 drop.
Work and Pensions Secretary Pat McFadden commented: “This month’s figures show that there are 400,000 more people in work than this time last year, but we know ongoing instability in the Middle East is causing uncertainty in our labour market. We have the right economic plan for growth and stability in a volatile world – and we are taking action to create opportunity and make sure that no one is left behind.”
