Vacancies in the UK jobs market have fallen again, while private sector wage growth has hit a near six-year low, according to new figures from the Office for National Statistics (ONS).
Vacancies at lowest level in over five years
The ONS said its early estimates show there were around 6,000 fewer vacancies between May and July compared with February to April. This brings the level of vacancies down to 707,000, the lowest in more than five years, or, outside of the Covid pandemic years, since 2014.
Vacancies slumped earlier in the year, a sign that firms were pulling back hiring in the face of economic uncertainty and higher wage costs. The latest ONS survey found that small firms may not be recruiting because of increased labour costs and other business expenses.
Private sector pay growth eases
The data also revealed that regular average wage growth in the UK’s private sector fell to 2.8% in the three months to June, the lowest level since the three months to October 2020. This is despite overall regular wage growth rising to 3.5% in the same period, from 3.4% in the three months to April, driven by a 6.1% increase across the public sector as a result of NHS pay awards.
The UK’s overall unemployment rate remained unchanged at 4.9% in the three months to June.
Experts weigh in
ONS director of economic statistics Liz McKeown said: “Vacancies remain broadly flat, though a small fall in the latest period puts them at the lowest level in more than five years.” She added that the latest decrease was driven mainly by smaller businesses, which cite labour and operating costs as reasons for not hiring new staff or replacing leavers. “Regular wage growth has remained broadly stable in recent months. However, private sector pay growth has continued to ease, while public sector pay growth remains elevated due to the timing of the latest NHS pay awards.”
Experts said the downturn in private sector pay could signal a squeeze in the cost of living amid higher energy costs linked to the Iran war. Suren Thiru, chief economist for the Institute of Chartered Accountants in England and Wales (ICEAW), said: “The UK labour market remains stuck in a low-churn limbo, with employers reluctant to hire, fire or offer bigger pay rises as they grapple with rising costs, intensifying global headwinds and heightened policy uncertainty.” He noted that cooling private sector wage growth is a double-edged sword, reducing the risk of interest rate rises but also signalling a deepening cost of living squeeze. “The persistent slide in vacancies is a red flag for the jobs market, suggesting labour demand is shrinking amid soaring employment and energy costs, while greater automation is also squeezing some entry-level roles.”
