Encouraging economic growth has yet to translate into more hiring, with businesses in no hurry to advertise vacancies and with the number of available candidates rising sharply, a survey shows.
The number of open roles in Britain contracted by nearly a fifth in the course of a year, falling to 852,703 in June, according to Adzuna, the jobs search site. Over the past month the number of vacancies dropped by almost 0.2 per cent.
The figures demonstrate that companies remain cautious about expanding their workforces under pressure from high interest rates and weak consumer spending. The Bank of England has lifted its base rate to 5.25 per cent, a 16-year high, putting pressure on household and businesses finances.
“The positive economic growth that has been recorded in the first two quarters of the year has yet to filter through to hiring,” Andrew Hunter, a co-founder of Adzuna, said. “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 still not fully recovered from the Covid pandemic.”
According to the Office for National Statistics, the UK’s GDP grew by 0.7 per cent in the first three months of this year, the fastest expansion in the G7. Forecasters have raised their expectations for the country’s growth this year.
However, weakness in the jobs market is likely to fuel speculation that the Bank will lower its borrowing costs for the first time in four years on Thursday. Financial markets think there is an even chance of this happening.
Members of the Bank’s ratesetting monetary policy committee have emphasised that wages growth must ease and the labour market should rebalance before they can consider cutting interest rates.
According to Adzuna, there were 1.95 jobseekers for every vacancy, the highest level in three years, a trend that often puts downward pressure on pay growth. Its research found that average starting salaries had risen by 2.72 per cent compared with June 2023. The average salary for each open role reached £38,843 last month, the highest this year.
Demand for workers was strongest in the professional services industry. The number of vacancies in the legal sector rose by 8.46 per cent in June, while roles in PR firms were up 3.78 per cent.
Spending has been weak this year because people have been keener to build up their savings, prompting consumer-facing companies to limit hiring. Adzuna said that vacancies in the hospitality and catering sector had dropped by 5.32 per cent, a departure from the typical increase in hiring among such businesses during the summer months. Healthcare and nursing roles fell by 4.16 per cent.
Cambridge was the top city for jobseekers, with the lowest ratio of candidates to roles at 0.35, followed by Guildford and Exeter. Bradford was the hardest city for job-hunting.
