UK Job Vacancies Hit Five-Year Low of 705,000 as Iran War Impacts Economy
The number of UK job vacancies has fallen to 705,000, its lowest level in five years, as the economic impact of the war in Iran begins to manifest. The Office for National Statistics (ONS) reported that the unemployment rate increased slightly to 5% in the three months to March, up from 4.9% in the preceding three months.
Average regular earnings growth declined to 3.4% in the first quarter of the year. After accounting for inflation, this represented a marginal increase of 0.3%. Economic analysts suggest these figures indicate the initial effects of the Middle East conflict on the domestic jobs market, warning that the demand for workers is likely to continue weakening if the hostilities persist.
Early ONS estimates show that job openings decreased by 28,000, or 3.9%, between February and April, reaching a level not seen since April 2021. Liz McKeown, ONS director of economic statistics, highlighted that "lower-paying sectors such as hospitality and retail have seen some of the largest falls in vacancies and payroll numbers, both in recent months and over the last year."
The ONS also noted a decrease of 100,000 in payroll employment figures for April. While McKeown cautioned that figures at the start of a new tax year can "carry greater uncertainty and have often seen larger than average upward revisions," Richard Carter, head of fixed interest research at Quilter Cheviot, projected that the pattern of falling payroll numbers could continue "for some time."
Carter stated that "Today's figures only capture the initial effects of the conflict, and the full impact will become more apparent in the coming months as higher costs and the potential for weaker consumer demand begin to filter through." Suren Thiru, chief economist for ICAEW, characterised the jobs data as showing "growing distress within the UK's labour market," linking it to "global headwinds and the growing financial squeeze on firms."
