UK job vacancies have fallen to their lowest level in over five years as companies hold back on recruiting new staff, according to official data. The Office for National Statistics (ONS) reported that vacancies dropped by 19,000 to 707,000 in the three months to May, the lowest since the three months to April 2021.
Drop Across Lower-Paying Sectors
The ONS noted that the decline in vacancies was particularly pronounced in lower-paying sectors and among smaller employers. Professional services experienced the largest fall during the quarter.
Meanwhile, the UK's unemployment rate edged lower to 4.9% in the three months to April, down from 5% in the three months to March.
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.
The data arrives ahead of the Bank of England's interest rate decision on Thursday, with policymakers widely expected to hold rates steady.
ONS Commentary
Liz McKeown, ONS director of economic statistics, said: “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 “some signs of workers moving into self-employment,” while the decline in vacancies suggests firms are “becoming more cautious about taking on new staff.”
Government Response
Work and Pensions Secretary Pat McFadden responded: “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.”
He emphasised the government's economic plan for growth and stability, including the largest youth employment reforms in a generation, backed by £2.5 billion investment, and the Connect to Work programme supporting 300,000 disabled people.
The Conservatives argued that the fall in unemployment masks a rise in economic inactivity. Shadow business secretary Andrew Griffith said: “These figures disguise the fact that many people have fallen out of the workforce and are adding to the ever greater ranks of sicknote Britain.”
Economist Views
Economists suggest the figures indicate a jobs market struggling under the strain of soaring energy bills and employment costs. Suren Thiru, ICAEW chief economist, said: “These figures seal the deal on a midday interest rate hold by reassuring rate-setters that a softening labour market can help keep this Iran-driven inflation shock short-lived.”
He added that the MPC’s vote split and minutes could tilt marginally more dovish, reflecting policymakers’ view that the US–Iran peace agreement could improve the likelihood of inflation slowing without additional policy action.
