UK job vacancies drop despite economic growth

The UK job market is experiencing a notable slowdown despite signs of economic growth, according to recent data. Job vacancies fell by nearly a fifth in June compared to the same time last year, indicating that businesses remain cautious about expanding their workforces. Andrew Hunter, co-founder of the job search site Adzuna, stated, “The positive economic growth recorded in the first two quarters of the year has yet to filter through to hiring. While businesses may have put their hiring plans on pause because of the general election, compared with the same time last year, hiring is down nearly a fifth across the UK. This is a clear sign that the jobs sector has not fully recovered from the Covid pandemic.” The number of open roles in Britain dropped to 852,703 in June, a 0.2 percent decrease from the previous month. This decline in vacancies is attributed to high interest rates and weak consumer spending, which have put pressure on both household and business finances. The Bank of England has raised its base rate to 5.25 percent, a 16-year high, further impacting the job market. Financial markets believe there is an even chance of future rate hikes, with members of the Bank’s rate-setting monetary policy committee noting that wage growth must ease and the labour market should rebalance before considering adjustments. Adzuna’s research also revealed that there were 1.95 jobseekers for every vacancy, the highest level in three years.

Job market reticence amidst growth

This trend often puts downward pressure on pay growth. However, average starting salaries rose by 2.72 percent compared to June 2023, with the average salary for each open role reaching £38,843 last month, the highest this year. Demand for workers varied across industries, with the professional services sector showing the strongest growth. Vacancies in the legal sector rose by 8.46 percent in June, while roles in PR firms increased by 3.78 percent. In contrast, consumer-facing industries, such as hospitality and catering, saw a 5.32 percent drop in vacancies, and healthcare and nursing roles fell by 4.16 percent. Geographically, Cambridge emerged as the top city for jobseekers, with the lowest ratio of candidates to roles at 0.35, followed by Guildford and Exeter. Bradford was identified as the most challenging city for job-hunting. The disparity between economic growth and job vacancy rates highlights the lingering uncertainties and challenges faced by the UK as it navigates its post-pandemic recovery. Businesses remain cautious about expanding their workforces, and the job market has yet to fully recover from the impact of the Covid-19 pandemic.