The UK job market is sending conflicting signals as vacancies continue their relentless decline while wages maintain strong growth despite rising unemployment.
Job openings plummeted by 44,000 to 718,000 between May and July, marking the 37th consecutive month of falls. This slide has pushed vacancies to 9.7% below pre-pandemic levels, signalling a significant cooling in employer demand.
Meanwhile, unemployment edged up to 4.7% in the April-June period. While the increase was marginal, it represents a concerning trend as joblessness now sits above pre-pandemic rates.
“There’s not much reason to be cheerful given the latest snapshot of the labour market,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.
“Although the picture has stayed relatively stable, unemployment has risen fractionally and stands at 4.7%. Vacancies are still dwindling and there’s mounting evidence that companies are increasingly cautious, hesitant about expanding and are battening down the hatches in an uncertain economic world. They’re not recruiting new staff, or replacing those who leave.”
Despite the softening job market, wages continue to climb at a robust pace. Before accounting for inflation, pay packets grew by 5% annually, excluding bonuses, with total pay including bonuses rising 4.6%.
However, the inflation picture tells a different story. After factoring in rising prices, real wage growth drops dramatically to just 1.5% excluding bonuses and 1.1% including them.
The employment rate reached 75.3%, showing improvement both quarterly and annually. Yet this figure remains stubbornly below pre-pandemic levels, highlighting ongoing labour market challenges.