UK job vacancies fall to five-year low as firms cut hiring

Summarised from 4 outlets · 5 reports · Updated 20 Oct, 08:14 · Archive

Job vacancies fell by 21,000 in three months to September to 691,000, the lowest in five years, as small firms cut recruitment due to rising labour costs.

Job vacancies in the UK have fallen by 21,000 in the three months to September to reach 691,000, marking the largest decline since the start of the year, according to the Office for National Statistics. This is the lowest level in over five years, with the last comparable figure recorded in April 2021. The fall comes as smaller businesses cut back on recruitment, with the ONS identifying increased labour costs as the primary reason for the slowdown.

Small firms have cited several factors driving their decisions to hire less. Energy costs have risen since the Iran war began, whilst increases in National Insurance contributions and the minimum wage have made it more expensive to employ staff. The Independent Business reports that small businesses are holding back expansion plans due to ongoing uncertainty about future employment costs, with the Autumn Budget adding to this hesitation.

Whilst vacancy numbers declined sharply, the unemployment rate fell to 4.7 per cent in the three months to August, down from 4.9 per cent in the previous quarter. This is the lowest level in more than a year. Additionally, payroll figures showed workers on payrolls increased by approximately 13,000 between August and September. Regular earnings growth rose to 3.7 per cent annually excluding bonuses, though this was lower than the previous three-month period. Including bonuses, annualised pay growth was also 3.7 per cent between June and August, below economists' expectations.

Economists have warned that the continued fall in vacancies signals wider labour market weakness. Martin Beck, chief economist at WPI Strategy, described the drop as 'more worrying', stating the UK faces 'a prolonged jobs squeeze rather than an employment crisis'. Suren Thiru, ICAEW chief economist, said the labour market is 'running on idle' with employers limiting recruitment in response to cost pressures and policy uncertainty.

The weaker jobs market may have implications for monetary policy. Economists have suggested that continued labour market weakness could prevent the Bank of England from raising interest rates in its efforts to combat inflation. The central bank's projections indicate that inflation could rise above four per cent in early 2027.

How it is being reported

• UK unemployment falls to lowest in a year - but vacancies drop to five-year low to underline jobs challengeThe ONS’s data also showed a boost for average wage growth across the UK workforce.Independent Business · 20 Oct, 08:02
• UK unemployment falls to lowest in a year but vacancies slide furtherThe ONS’s data also showed a boost for average wage growth across the UK workforce.Independent Business · 20 Oct, 07:29
• UK unemployment falls to lowest in a year but vacancies slide furtherThe ONS’s data also showed a boost for average wage growth across the UK workforce.Evening Standard · 20 Oct, 07:29
• Job vacancies fall below 700,000 for first time in over five yearsJob vacancies have fallen below 700,000 for the first time in over five years, official data has shown, as the UK labour market continued to show signs of weakening. The Office for National Statistics (ONS) said vacancy levels decreased in the three months to September by 21,000. It means the number of job vacancies stood [...]City AM · 20 Oct, 07:21
• Job vacancies fall as small firms cut back on recruitmentSmall firms cite labour costs as a key factor in scaling back hiring, the Office for National Statistics says.BBC Business · 20 Oct, 07:19

In this story: Office for National Statistics · Bank of England · John Healey · Martin Beck · Suren Thiru · UK

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