Key facts
- UK job vacancies fell to 712,000 in the three months to May.
- Unemployment remained unchanged at 4.9% for the same period.
- Private sector earnings growth slowed to 2.9%.
- Average earnings growth, including bonuses, was 4.3%.
- Youth unemployment reached its highest level since 2014 at 16.4%.
Official figures released by the Office for National Statistics show that UK employers reduced job vacancies in May, signaling a fragile economic outlook. Job vacancies fell to 712,000 in the three months to May, a significant decrease from nearly double that level in 2022, as companies delayed hiring.
Unemployment remained unchanged at 4.9% for the same period. This presents a challenge for Prime Minister Andy Burnham, who has pledged to boost living standards through a 10-year economic plan. Latest data indicated that private sector earnings growth slowed to 2.9%, with the average rise in earnings, including bonuses, settling at 4.3%. This was below economists' forecasts of 4.5% for pay growth and 5% for unemployment.
The UK's labor market has shown signs of weakening over the past two years, with unemployment gradually increasing from a low of 3.6% in mid-2022. Suren Thiru, chief economist at ICAEW, described the labor market as fragile, attributing the hiring slowdown to high employment taxes, economic turbulence, and increased uncertainty. He warned that job seekers might face further strain as elevated costs and weakening demand continue to inhibit hiring.
The deceleration in private sector pay growth is expected to alleviate pressure on the Bank of England to raise interest rates to combat inflation. Several Bank of England officials have voiced concerns about persistently high wage growth contributing to production costs and inflationary pressures.