The UK's job market has hit a five-year low, with new employment starts plummeting as employers adopt a more cautious approach. According to the latest figures from the Office for National Statistics (ONS), this decline in job starts mirrors a sustained reduction in available vacancies. The ONS describes the overall labour market as "broadly stable", but indicators point to weakening areas.
Liz McKeown, director of economic statistics at the ONS, noted that the drop in job vacancies suggests firms are becoming increasingly hesitant about taking on new staff. This sentiment is echoed by the British Chamber of Commerce (BCC), whose head of policy for people and work, Patrick Milnes, stated that "many businesses are pressing pause on recruitment as uncertainty looms around costs, global headwinds and domestic policies".
Despite the decline in new job starts, the unemployment rate has edged down to 4.9% in the three months to April, from 5% in the preceding quarter. Regular pay growth remains at an annual rate of 3.4%, outstripping inflation. However, this positive trend is tempered by the revelation that regular wage growth in the private sector has slowed to its lowest rate in five and a half years.
Self-employment appears to be on the rise as workers adapt to the shrinking job market, with available vacancies declining. Economists are interpreting these figures as evidence of a gradual easing in the labour market, which could give the Bank of England confidence to maintain current interest rates. The ONS acknowledges that its Labour Force Survey may have been influenced by low response rates, potentially impacting the data's precision.