UK employers cut job vacancies as Burnham aims to lift living standards | Economics

Employers reduced the number of job vacancies in May, according to official figures highlighting Britain’s “fragile” economic outlook amid conflict in the Middle East.

The Office for National Statistics said job vacancies fell to 712,000 – almost half the level in 2022 – as employers delayed hiring new staff in the three months until May.

The unemployment rate remained at the same level as in April; 4.9% illustrates the challenge ahead for Andy Burnham as he seeks to inject renewed vigor into the economy.

The new prime minister has pledged to raise living standards in all regions as part of a 10-year economic plan, but the latest wage data showed private sector earnings growth fell to 2.9 per cent and the average increase in earnings, including bonuses, remained at 4.3 per cent.

Economists had forecast an increase in average wages with bonuses from 4.4% for the three months to the end of April to 4.5% for the three months to May.

They also expected unemployment to rise from 4.9% to 5% in the three months to April over the same period.

The UK’s job market has weakened over the past two years, with unemployment rising steadily from a low of 3.6% in the summer of 2022.

Last year, the unemployment rate peaked at 5.2 percent, followed by a slight decline during a more stable period after the autumn budget and before Donald Trump’s attack on Iran.

Suren Thiru, chief economist at accounting body ICAEW, said: “These figures point to a fragile labor market, where rising employment taxes and economic turbulence caused by the Iran war are pushing some firms to limit hiring and cut pay.

“The continued decline in job vacancies is a stark warning that staff demand is dissipating amid sky-high staff costs, more burdensome regulations and increased uncertainty.

“Job seekers are likely to face further pressure over the summer, with unemployment expected to rise significantly further as rising cost pressures and weakening demand increasingly hinder hiring – particularly if uncertainty over future tax policy continues.”

Economists said the decline in private sector pay rises would ease pressure on the Bank of England to raise interest rates to calm inflation.

Some Bank of England officials have expressed concern that wages remain stubbornly high, increasing production costs and putting pressure on inflation.