The persistent decrease in job vacancies is underscoring a cooling labour market, fueling optimism for potential interest rate cuts in the coming months.
According to the latest labour market report by Adzuna, a leading job search engine, vacancies have plummeted by over 17% year-on-year, with a further 0.5% decline on a month-on-month basis.
The ratio of job vacancies to unemployed individuals has emerged as a pivotal gauge of labour market vitality, particularly amid deliberations at the Bank of England regarding interest rate adjustments. The decline in vacancies, reflective of diminished demand for workers, contrasts starkly with the peak levels exceeding a million observed in 2022, which empowered employees to negotiate better pay deals and contributed to elevated earnings growth, consequently fueling inflationary pressures.
Adzuna’s data reveals a total of 862,000 vacancies across the economy, marking the fifth consecutive month of diminishing job opportunities. The ratio of jobseekers per vacancy has surged to 1.87, the highest since August 2021, indicating heightened competition in the job market.
Notably, vacancies in sectors such as domestic help, cleaning, and trade and construction have witnessed substantial declines of over 40% over the past year.
Andrew Hunter, co-founder of Adzuna, characterizes the current labour market landscape as “challenging” for jobseekers, citing persistent declines in vacancies, rising unemployment, and intensifying competition for available roles.
As labour market surveys assume greater significance in monetary policy discussions, Adzuna’s findings point to a nearly 3% increase in advertised salaries over the past year, with a 0.4% uptick between February and March. This uptrend in earnings may embolden the Bank of England’s Monetary Policy Committee (MPC) to contemplate interest rate cuts in the upcoming summer months.
The MPC, which has maintained the base rate at 5.25% since September 2023, is inching closer to its first interest rate cut since 2020. While opinions within the committee vary, with some advocating for further easing to counter high inflation, others express concerns about the potential impact of monetary tightening on economic growth.
With consumer price inflation easing to 3.2% in March, albeit slightly above private sector forecasts, the MPC’s upcoming decision on May 9 is poised to be closely monitored, with expectations of a majority vote to maintain the status quo on interest rates.
