𝓤𝓷𝓲𝓽𝓮𝓭 𝓝𝓮𝔀𝓼

Job vacancies have fallen to a five-year low as small firms scale back recruitment due to soaring wage costs, according to official figures.

The Office for National Statistics (ONS) said there were about 8,000 fewer vacancies quarter on quarter in the three months to August, at 702,000.

This figure remains the lowest since spring 2021, or, outside the Covid pandemic years, for over a decade.

According to the ONS, small firms are flagging ongoing pressures from rising wage bills as a factor holding them back from taking on staff.

The data showed regular average weekly earnings growth remained unchanged at 3.5 per cent in the three months to July, while it continues to outstrip inflation, rising by 0.8 per cent with the Consumer Prices Index taken into account.

Total wage growth stood at 3.9 per cent, down from 4.2 per cent in the three months to June.

This is a key figure for the pensions triple lock calculation and puts pensioners on course for a 3.9 per cent uplift in the state pension next year, according to experts.

The UK unemployment rate also remained unchanged at 4.9 per cent in the three months to July, but more timely data estimates that workers on payrolls slumped by 26,000 during August to 30.2 million, following a 19,000 drop in July, though the latest 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.”

The figures come ahead of the interest rate decision on Thursday, with policymakers expected to vote to hold at 3.75 per cent.

Thomas Pugh, chief economist at RSM UK, said that despite ongoing weakness, the statistics show signs of stabilisation in the jobs market, which may give the Bank room to increase rates to combat inflation in the coming months.

He 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 per cent.

“We still expect the MPC to hold rates on Thursday, but a rate hike as early as November is now looking much more likely.”

Work and Pensions Secretary Pat McFadden said the ONS figures “show a labour market that remains resilient in the face of significant global economic pressures”.

“But we know there is more work to do, particularly to ensure young people gain the skills, experience and confidence needed to succeed,” he added.