According to a recent survey by KPMG and the Recruitment and Employment Confederation (REC), job vacancies have fallen at their fastest rate since 2021 as employers put hiring decisions on ice amid continued macroeconomic uncertainties. This falls into line with recent updates from UK recruitment firms and will inform the debate on the timing of any prospective interest rate cuts.
Analysis shows that unemployment fluctuations in relation to economic output are far less pronounced when the economy is subject to prolonged labour supply constraints. They are also less pronounced in economies that are disproportionately given over to the services sector.
For a time, the UK had to contend with a “jobless recovery” in the aftermath of the global financial crisis, whereas the post-pandemic domestic jobs market remained buoyant even when economic growth rates were sluggish. However, the REC survey confirms that employers have become more circumspect on the labour front following 14 successive rate increases. Indeed, the monthly number of people recruited into permanent jobs across the UK has been in decline since the final quarter of 2022, although the deterioration has been less noticeable because it has been incremental for the most part.