Job vacancies at five-year low as smaller firms scale back recruitment

The number of job vacancies has fallen to its lowest level in more than five years as smaller businesses cut back on recruitment, the latest official figures indicate.

Vacancy numbers dipped slightly over the May-to-July period to 707,000, according to the Office for National Statistics (ONS), which said small firms were citing labour and operating costs as reasons for scaling back hiring.

The ONS said the labour market was “little changed overall”, with the unemployment rate remaining at 4.9%.

Growth in regular earnings – which excludes bonuses – picked up slightly, rising at an annual pace of 3.5% in the three months to June.

“The UK labour market remains stuck in a low-churn limbo, with employers reluctant to hire, fire or offer bigger pay rises as they grapple with rising costs, intensifying global headwinds and heightened policy uncertainty,” said Suren Thiru, chief economist at the Institute of Chartered Accountants in England and Wales.

“The persistent slide in vacancies is a red flag for the jobs market, suggesting labour demand is shrinking amid soaring employment and energy costs, while greater automation is also squeezing some entry-level roles.”

Yael Selfin, chief economist at KPMG, noted that while pay growth picked up, this was “driven by a rise in public sector wages”.

Private sector pay growth, which she said gave more accurate picture of underlying conditions in the labour market, slowed to 2.8%.