British businesses are slowing hiring just as the number of people looking for work is rising, according to data indicating “lingering uncertainty” about the economic outlook.
The availability of new job candidates rose in June at the highest rate since the peak of coronavirus restrictions in the UK in December 2020, according to the latest jobs report from the Employment and Employment Consortium (REC) and KPMG.
The number of people being placed in permanent jobs by staffing agencies also fell, and wage growth fell to its lowest rate in more than two years in June.
It comes ahead of UK labor market data on Tuesday, which economists expect to show unemployment remaining at 3.8%, still near a four-decade low. However, economists are watching with interest for signs of weak growth.
The Bank of England quickly raised interest rates from 0.1% in late 2021 to 5%. Financial markets have priced in further hikes in the coming months as the Bank tries to bring down inflation, which has remained stubbornly high.
Claire Warnes, partner at KPMG UK, said: “The sharp rise in candidate availability this month – the highest in two and a half years – is a major concern for the economy, reflecting the effects of an ongoing slowdown in hiring coupled with increased job losses across many sectors.
It said employers appeared to prefer temporary over permanent jobs due to “ongoing economic instability”.
Neil Carberry, chief executive of the Regional Economic Center, whose members were surveyed, said it was likely more people were looking for new jobs in reaction to higher inflation, as well as a higher number of job losses. It is, he said, “not surprising, therefore, that the rate of rise in wages has fallen again.”
However, Carberry added that the picture was mixed, given unemployment rates remain low.
“Despite these trends, the job market remains very tight,” he said. “There remains a huge skills shortage, with accounting, construction, teaching and nursing among those sectors struggling to find and retain workers.
“Growth in vacancies for temporary and permanent staff in hotels, catering, blue-collar jobs, and temporary positions in retail, indicates that companies expect that people are still willing to spend their wages on goods and services despite their reduced purchasing power and the broader cost-of-living crisis.”
The cost of living crisis has increased pressure on the purchasing power of households. Rest Less, a company that provides job listings and advice for the over-50s, said the income hit may have led to more women planning to work after retirement age.
Its analysis of UK government statistics found that 44% of women aged 50 to 65 plan to either stay at work at current working hours or reduced hours.
Stuart Lewis, CEO of Rest Less, said: “Nearly half of women aged 50-65 say they plan to continue working in some capacity after reaching state pension age – a number that is likely to rise further given the subsequent cost crisis. live.”