The number of job openings in the UK has dipped below 1 million for the first time since May 2021, signalling that the labour market is cooling off as higher interest rates take their toll on the economy.
Vacancies dropped to 998,562 last month, down 2.7 per cent from the 1.02 million job postings in October, according to Adzuna, the job search engine. On an annual basis, open roles were down by 8.6 per cent.
The survey underscores that demand for workers has fallen in response to pessimism about the health of the UK economy and tighter financial conditions. Depressed consumer spending has reduced the need for companies to expand staffing levels, prompting them to rein in hiring activity.
Growth unexpectedly turned negative at -0.3 per cent in October and gross domestic product (GDP) is likely to stall in the final quarter of this year, according to the Bank of England.
Britain’s jobs market this year has confused economists, who had anticipated a sharp increase in unemployment caused by the Bank of England raising interest rates aggressively to a 15-year high of 5.25 per cent.
However, joblessness has been broadly contained, rising slightly to 4.2 per cent. According to official data from the Office for National Statistics, vacancies have contracted for 17 months in a row but are still far above their pre-pandemic level of just under 1 million.
New projections from KPMG indicated that the UK’s unemployment rate would climb to 4.9 per cent by 2025 and the consultancy warned that broader economic growth was “vulnerable to shocks” in the coming years. The forecast expects the wider economy to reach growth of 0.5 per cent this year and in 2024.
Adzuna’s survey showed that the market has deteriorated rapidly in the second half of this year, suggesting that demand for workers will be softer in 2024 and unemployment will creep up.
In the space of six months, vacancies fell to their lowest level this year in November from a high point in June of 1.05 million. For most of this year, workers have found it relatively easy to find a new job with a better salary, due to strong demand for staff.
Falling vacancies and an increase in volume of available candidates, driven by a rise in redundancies, have raised competition between workers. The number of job seekers per vacancy hit 1.56 in November, up from a low of 1.45 in June.
Andrew Hunter, co-founder of Adzuna, said: “Competition is growing across sectors, making it harder for UK job hunters to find the right roles for them, particularly as sectors tighten their belts.”
Adzuna said that advertised salaries rose for the first time since June, up 0.74 per cent to an average of £37,221 and down from their 2023 peak of £37,806. London was the only area of the UK where proposed salaries fell, down 2 per cent to an average of £42,928.
Lawyers command the highest potential pay, with average advertised salaries in the sector at £54,633, followed by IT workers, who are offered an average of £51,284. Demand for HR and recruitment staff is severely depressed, with vacancies in the sector down 42.5 per cent over the past year.
Just 50 per cent of open roles had their salaries included in the job advertisement in November.
Hunter said: “Salaries appear to be rising again — yet with one of the worst years on record for salary transparency, it’s still difficult for potential recruits to understand compensation for the roles they’re applying for.”