UK job vacancies have fallen to a five-year low, with the total dropping to 702,000 in the three months to August, according to figures from the Office for National Statistics (ONS). That marks a fall of around 8,000 quarter on quarter, the lowest point since spring 2021 and, outside the pandemic years, the lowest for more than a decade.
The ONS publishes labour market data covering employment, wages and job vacancies across the UK. Its figures give policymakers, businesses and the public a regular snapshot of how the jobs market is performing.
UK Job Vacancies Five-Year Low: What the Numbers Show
The 702,000 figure is not just a post-pandemic milestone. According to a UK Parliament Commons Library Research Briefing, vacancies in the June to August period have now fallen below pre-pandemic levels entirely, meaning the jobs market has more than reversed the extraordinary hiring surge that followed the lifting of Covid restrictions. The same briefing puts the number of unemployed people aged 16 and over at 1.78 million.
To understand how far things have shifted, it helps to look at the recent trajectory. According to BBC News, vacancies hit a high of almost 1.3 million in mid-2022, before gradually falling to 707,000 in May to July. The latest ONS data shows that decline has continued, with the total now at 702,000.
The ONS says smaller businesses are a key part of the story. They continue to report that rising labour costs are affecting their hiring decisions, making them reluctant to take on new staff even when they have work to fill.
Wages Rising, but Payrolls Shrinking
On wages, the ONS data shows regular average weekly earnings growth held steady at 3.5% in the three months to July. In real terms, after accounting for inflation using the Consumer Prices Index (CPI), earnings were up 0.8%, meaning workers’ pay is still rising faster than prices overall.
Total wage growth, which includes bonuses, came in at 3.9%, down from 4.2% in the three months to June. That 3.9% figure carries particular weight for pensioners: experts say it puts them on course for a 3.9% uplift in the state pension next year, through the so-called triple lock mechanism, which links pension increases to whichever is highest among earnings growth, inflation or 2.5%.
Private sector wage growth stood at 2.9%, unchanged from the previous reading and at six-year lows.
The UK unemployment rate remained at 4.9% in the three months to July. More timely data on payrolls, however, tells a sharper story. The ONS estimates that workers on payrolls fell by 26,000 in August, bringing the total to 30.2 million, following a 19,000 drop in July. The August decline is the largest single-month payroll fall since November last year, though the ONS notes these early figures are subject to revision.
Liz McKeown, ONS director of economic statistics, said: “Payrolled employee numbers continue to edge down, with falls over the past year particularly evident in the retail and hospitality sectors. Vacancies remain at their lowest level outside the pandemic period for more than a decade, with smaller businesses continuing to report that increased labour costs are affecting hiring decisions.”
What This Means for Interest Rates
The data arrives ahead of an interest rate decision by the Bank of England, with policymakers expected to vote to hold rates at 3.75%. Thomas Pugh, chief economist at RSM UK, said the figures show signs of stabilisation in the jobs market, which could make the Bank’s position more difficult if inflation continues to rise.
Pugh said: “The Monetary Policy Committee (MPC) has so far relied on the weakness of the labour market as cover for keeping rates on hold, but that position looks increasingly difficult to hold if the labour market stabilises and inflation rises to around 4%. We still expect the MPC to hold rates on Thursday, but a rate hike as early as November is now looking much more likely.”
Pantheon Macroeconomic expects the Bank to raise rates in November and again in February, with attention turning to whether a loosening labour market can offset the eventual impact of surging energy costs on wage growth and inflation.
Work and Pensions Secretary Pat McFadden said the figures “show a labour market that remains resilient in the face of significant global economic pressures”, adding: “We know there is more work to do, particularly to ensure young people gain the skills, experience and confidence needed to succeed.”
Official inflation data published on Wednesday will be closely watched, with concerns that rising oil and energy prices could push the cost of living higher in the months ahead.
