(Bloomberg) — Job vacancies in the UK fell by the most in more than three years in December, another sign a red-hot labor market is cooling.
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Figures in latest Job Market Report published by online portal Adzuna showed advertised vacancies declined 6.95% in December, the largest drop since June 2020. Early data suggests January will see a similar sized fall, marking what could be the start of difficult year for jobseekers, Adzuna said.
The shift may ease upward pressure on wages that’s been a symptom of persistent inflationary pressures the Bank of England is trying to rein in. The central bank is concerned that average earnings are rising too quickly for inflation to return sustainably to the 2% target.
“Hiring is clearly slowing down but worryingly this data also suggests that there’s been little if any rebound in activity in the new year,” said Tony Wilson, director at the Institute for Employment Studies.
“Ordinarily, we would expect quite a strong bounce back in recruitment after Christmas, but the fact that this hasn’t happened this year suggests that a lot of firms are holding back given wider uncertainty in the economy,” he said.
Consumer price growth peaked in 2022 at 11.1% and is still double the target at 4%. The BOE has raised rates to 5.25% from 0.1% in Dec. 2021 to tame inflation and is expected to leave them on hold at that level on Thursday.
The year has started with a wave of announcements about job cuts. Tata is axing 2,800 jobs at its Port Talbot steel works, UK banks are cutting hundreds of jobs and the fund manager Abrdn Plc is getting rid of 500 positions.
At the same time, health and rail workers have been striking for better pay as people across the country seek above-inflation pay rises to make up for real-term cuts in earnings in 2022 and 2023.
The economy weakened in January, according to the CBI employer group’s monthly “growth indicator,” which found that private sector activity fell in the three months to January. Activity has now been flat or falling for the last year and a half, the CBI said.
The data from Adzuna, which is used by the BOE and the Office for National Statistics, also showed the December fall was the largest since the series began in 2016, excluding the period April to June 2020 at the start of the pandemic.
Competition for jobs rose to its highest level since September 2021, with 1.68 jobseekers per vacancy – up from its lowest level since the start of the pandemic of 1.45 last June. Pay growth remains firm, with average advertised salaries up 0.96% in the month to £37,577 ($47,826). January and February will be critical for the BOE as annual pay settlements are agreed.
“Jobseekers hoping for a positive start to the year won’t be happy to see December’s data with roles down nearly 7% compared to November and nearly 13% compared to the same time in 2022,” said Andrew Hunter, Adzuna’s co-founder.
“This will likely continue into January with data so far indicating that jobs are expected to drop further before they begin picking up. Yet salaries have remained strong despite the dip in vacancies.”
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