UK New Job Starts Hit Five-Year Low as Vacancies Continue to Fall

The number of people embarking on new jobs has reached its lowest level in half a decade, according to new figures. This downturn accompanies a continued reduction in available job vacancies across the UK economy.

The Office for National Statistics (ONS) reported that while the overall labour market maintains a state of “broad stability”, specific sectors are exhibiting clear signs of weakening. Liz McKeown, the ONS’s director of economic statistics, observed that the consistent drop in job vacancies suggests a growing reluctance among companies to hire new staff.

Despite these developments, the unemployment rate saw a marginal decrease to 4.9% for the three months ending in April, a slight fall from 5% in the preceding quarter. Regular pay, which excludes bonus payments, registered an annual growth rate of 3.4% during the same period, remaining consistent with the previous three months. This indicates that average earnings are currently rising marginally faster than consumer prices.

However, Ms McKeown highlighted that the rate of regular wage growth within the private sector is now at its lowest in five and a half years. She also noted emerging evidence of workers transitioning into self-employment, potentially as a response to the shrinking pool of traditional vacancies.

These statistics precede a crucial interest rate decision by the Bank of England later today, where analysts largely anticipate the central bank will maintain its key rate at 3.75%.

Ben Caswell, a senior economist at the National Institute of Economic and Social Research, interpreted the data as indicative of a “gradual easing in the labour market”. Patrick Milnes, the British Chamber of Commerce’s (BCC) head of policy for people and work, reiterated that businesses remain hesitant to hire, citing ongoing struggles with labour costs. He stated that “Many businesses are pressing pause on recruitment as uncertainty looms around costs, global headwinds and domestic policies.”

The government is simultaneously grappling with rising youth unemployment, as more firms prioritise candidates with previous experience or opt to curtail graduate schemes. It is worth noting that the ONS’s statistical methodology has faced scrutiny, with a review last year identifying “deep seated” issues, particularly concerning the consistently low response rates for its Labour Force Survey.