UK jobs market weakens as employment costs grow

Job vacancies have fallen to the bottom stage in almost 4 years, suggesting demand for staff is weakening as employment prices develop.

The variety of jobs on provide fell to 781,000 within the first three months of the yr, the Workplace for Nationwide Statistics (ONS) mentioned, whereas payroll numbers additionally declined.

Common UK pay continued to rise – up 5.9% – however will increase in employer Nationwide Insurance coverage Contributions in addition to Nationwide Minimal Wage hikes which got here into power this month are forecast to weigh on salaries.

“The looming hike in employers’ taxes in April could be very more likely to have persuaded employers to carry again on hiring,” mentioned Sarah Coles, head of private finance at Hargreaves Lansdown.

Employment Minister Alison McGovern welcomed a seamless rise in actual wages and mentioned April’s modifications would increase “folks’s payslips and enhancing residing requirements”.

Nonetheless, the variety of staff on payrolls dropped by 78,000 in March and had been revised down for the earlier month.

Ms Coles mentioned that pausing hiring “is the best lever for companies to tug once they need to gradual issues down. It is cheaper and damaging than letting folks go, so could also be an indication of issues to return”.

The ONS mentioned the UK unemployment price remained at 4.4%, roughly the identical because the earlier three months.

The employment price for folks aged 16 to 64 years was 75.1%, nonetheless under Labour’s goal of 80% employment.

Nonetheless, the ONS has mentioned its jobs figures must be handled with warning due to low response charges to its employment survey, on which the figures are based mostly.

Whereas wage progress stays sturdy, some economists are predicting this won’t final.

Yael Selfin, chief economist at KPMG UK, mentioned: “The short-term influence of the rise in labour prices which got here into impact in April, will seemingly put downward stress on pay over the approaching months.”

In the meantime, recruitment agency Manpower mentioned the entire image of the labour market won’t be absolutely understood for a while because the impact of Donald Trump’s tariffs spreads.

“We’re seeing a lot broader scale cutbacks than we might beforehand anticipated as increased prices coincide with the Trump-led tariffs and British Metal negotiations, all including to a larger sense of uncertainty for companies,” mentioned Anna Spaul, market intelligence director at ManpowerGroup.

The power in wage progress contrasted with indicators of weak spot in hiring illustrates the dilemma dealing with the Financial institution of England and rates of interest that are at the moment at 4.5%.

Wage progress may delay additional price cuts however the Financial institution might act to stimulate the financial system following the implementation of tariffs within the UK and globally.

The Financial institution will maintain its subsequent curiosity rate-setting assembly in Could.