Andy Burnham’s premiership has begun with a stark warning from the labour market: job vacancies have fallen to 712,000 in the three months to May – almost half the level seen in 2022, according to the Office for National Statistics.
The figures, which show a drop of 7,000 between April and June, underline the “fragile” economic outlook as employers put off hiring new staff. Unemployment held steady at 4.9%, defying economists’ expectations of a rise to 5%, but the UK’s jobs market has been weakening for two years, climbing from a low of 3.6% in summer 2022 to a peak of 5.2% last year before a brief respite.
“UK job vacancies halve to 712,000 as unemployment holds at 4.9%, signalling a fragile economy for new PM Burnham.”
The new prime minister has promised to raise living standards across all regions as part of a 10-year economic plan, but the latest pay data shows private sector earnings growth dropping to 2.9%, pulling the average rise in earnings including bonuses down to 4.3% – below the 4.5% forecast by economists.
Suren Thiru, chief economist at the accountancy body ICAEW, said the figures point to a “fragile labour market, with soaring employment taxes and the economic turbulence sparked by the Iran war pushing some firms to limit recruitment and cut pay awards”.
“The continued fall in job vacancies is a stark warning that demand for staff is dissipating under the weight of sky-high staffing costs, more onerous regulation and heightened uncertainty,” he added.
Thiru warned that jobseekers “will probably face more strain over the summer, with unemployment likely to edge noticeably higher as elevated cost pressures and weakening demand increasingly inhibits hiring – especially if uncertainty over future tax policy persists”.
The drop in private sector pay growth could ease pressure on the Bank of England to raise interest rates to calm inflation, after several officials expressed concern over stubbornly high pay adding to costs. But for Burnham, the challenge is immediate: reviving a labour market where demand for staff is fading and living standards remain under threat.
