UK Job Vacancies Hit Five-Year Low as Pay Growth Slows

LONDON — Britain's labour market is showing fresh signs of weakness after the number of job vacancies fell to its lowest level in five years, while wage growth slowed across the private sector.

New Office for National Statistics figures show there were around 707,000 vacancies between May and July, down 6,000 from the previous three-month period.

The figures highlight increasing caution among UK businesses as employment costs and economic uncertainty remain elevated.

Average total pay growth, including bonuses, slowed to 4.1% in the three months to June, compared with 4.4% previously. Private-sector regular pay growth fell to 2.8%, its weakest rate since October 2020.

The unemployment rate remained at 4.9%, while the number of workers on company payrolls fell by 13,000 in July.

For businesses, weaker wage pressures could provide some relief from rising employment costs. However, the decline in vacancies suggests employers are becoming more cautious about recruitment.

The cooling labour market could also influence the Bank of England's interest-rate decisions.

Economists have suggested that slowing private-sector pay growth reduces the risk of persistent wage-driven inflation, potentially making policymakers less likely to raise interest rates later this year.

The data comes as British companies face a difficult combination of uncertain economic conditions, elevated costs and weaker hiring demand.

At the same time, annual earnings growth after inflation remained positive, suggesting workers' real pay is still increasing, although the gap could narrow if inflation accelerates.

For Britain's business sector, the latest figures present a mixed picture: wage pressures are easing, but weaker recruitment points to a more cautious corporate environment.

Companies and investors will now watch upcoming inflation figures closely for further clues about consumer demand, business costs and the future direction of UK interest rates.