The UK job market is cooling further as companies pull back on hiring plans, with new figures revealing fewer vacancies and more people looking for work.
A sluggish economic outlook and rising employment costs have put employers in a holding pattern, even as inflation begins to ease and interest rates fall.
According to the latest KPMG and REC job market survey, conducted by S&P Global, February marked the sixteenth consecutive month of falling vacancies, with permanent job openings declining more sharply than temporary roles.
According to Euronews, it’s the twenty-ninth straight month that permanent staff appointments have dropped, although the decline was softer than in recent months—a potential signal of better news to come.
“While it is still a wait and see approach to hiring… the softer decline could be an indication that expectations of further interest rate cuts and better-than-expected recent economic data are starting to release some of the pressures on business,” said Jon Holt, Group CEO and UK Senior Partner at KPMG.
Where the Jobs Are (and Aren’t)
The steepest fall in demand for permanent staff was seen in secretarial and clerical roles, followed by executive/professional and retail positions. Temporary jobs in executive and retail sectors also saw significant reductions, though blue collar roles fared slightly better, recording the softest drop in demand.
At the same time, the number of redundancies is ticking up, adding more jobseekers to an already competitive market. February saw a noticeable increase in candidate availability, for both permanent and temporary positions.
But more people looking for work hasn’t translated into better pay.
The rate of starting salary growth slowed to its weakest pace in four years, dipping below average levels. Temporary pay growth was minimal.
A Fragile Recovery
The most recent ONS data put the UK unemployment rate at 4.4% for October to December 2024. However, experts warn that number could rise further as new cost pressures kick in this spring—including a 6.7% rise in the minimum wage and higher National Insurance contributions for employers.
“Things are still slow as companies hold their breath in the face of significant cost rises from April,” said Neil Carberry, CEO of the Recruitment & Employment Confederation (REC). “The Chancellor must use the Spring Statement to build their confidence in growth.”
A separate business report from advisory firm BDO showed sentiment in the corporate sector slipping to levels not seen since the aftermath of the Global Financial Crisis, with its optimism index dropping to 94.30.
Though the Bank of England recently cut interest rates to 4.5% to support economic recovery, the effects are not immediate.
“We know these cuts can take over 18 months to fully impact the economy,” said Kaley Crossthwaite, Partner at BDO. “Businesses will need continued support in the meantime to address workplace challenges and fully reach their growth potential.”
