Number of job vacancies hits five year-low

The number of job vacancies has fallen to its lowest level for five years as businesses cut back on recruitment, according to the latest official figures.

The Office for National Statistics (ONS) said that while the labour market remained "broadly stable", some areas showed signs of weakening.

The number of job vacancies in the March to May period fell to 707,000, the ONS said, the lowest level since February to April 2021.

Liz McKeown, the ONS's director of economic statistics, said the further drop in job vacancies suggested that "firms are becoming more cautious about taking on new staff".

The professional services sector saw the largest fall in vacancies, but retail and hospitality also saw significant drops.

Data from HMRC shows that the number of new recruits was at a five-year low, with the number of 'inflows', or new hires, just under 540,000 in April - the lowest monthly figure since March 2021.

McKeown said that there were "some signs of workers moving into self employment" against a backdrop of falling vacancies.

The unemployment rate fell slightly to 4.9% in the three months to April, from 5% in the three months to March.

Regular pay — which excludes bonuses — grew at an annual rate of 3.4% in the three months to April. That was unchanged from the three months to March and means that average earnings are still rising slightly faster than prices.

However, McKeown said regular wage growth in the private sector was rising at its lowest rate in five and a half years.

'Harder' to hire young people

Jamie Younger, who opened The Victory pub in south London last month, said rises to the minimum wage and national insurance contributions had "made life very difficult"

He said many pubs and restaurants were now only hiring people with several years' experience, "rather than trying to support a younger generation and get them into their first job".

Cutting VAT, a measure called for by hospitality groups, would help ease the pressure and "give us the opportunity to train young people", he added.

"There is a benefit of employing someone in their first job because you get to train them… and mould that person," he said. "But with the financial restrictions it's becoming harder and harder every day."

Sasha Swann, a student working in the pub's kitchen over the summer, said she had been thrown in "at the deep end… but it's made me learn so much".

She said she was "extremely fearful" about entering the world of work after university. "It's all up in the air whether we are going to get those jobs."

Shazia Ejaz, the Recruitment and Employment Confederation's (REC) director of campaigns, said: "Global pressures and domestic political uncertainty are making employers hesitant to commit to hiring although latest REC data shows temp hiring is faring better than permanent.

"With the Gulf crisis resolution on the table, the government has an opportunity to kick off a new phase in hiring."

The latest jobs figures come ahead of the Bank of England's decision on interest rates later on Thursday. Analysts broadly expect the Bank to hold its key rate at 3.75%.

Ben Caswell, a senior economist at the National Institute of Economic and Social Research, said the data pointed to a "gradual easing in the labour market".

"Alongside yesterday's softer inflation figures and the tentative agreement to reopen the Strait of Hormuz, this gives the Bank of England the final green light to vote for a hold this afternoon."

Yael Selfin, chief economist at KPMG UK, said the labour market was not proving a major contributor to inflationary pressures, with private sector wage growth easing.

"Against a weak economic backdrop, workers are increasingly reluctant to push for higher pay, reducing the likelihood of second-round effects feeding through from the labour market into wider cost pressures."

The quality of ONS statistics has been criticised in recent years, with a review last year finding "deep seated" issues with the body.

The Labour Force Survey, which it uses to report payroll and employment figures, has suffered from low response rates.