UK vacancies fall as hiring slows

Official data show vacancies fell and payrolls contracted, signaling a gradual cooling of the UK's labor market.

UK vacancies fall as the jobs market cools

The Office for National Statistics says vacancies fell 5.8% between May and July to 718,000, with a broad pullback across sectors. Payroll numbers declined by 8,000 from June to July, while unemployment remained at 4.7% and wage growth stayed at 5%.

Analysts say some firms are delaying recruitment or not replacing leavers, and wage dynamics still influence the inflation outlook. The Living Wage rose to 12.21 pounds per hour and employer National Insurance contributions increased, raising the cost of hiring. The data show the cooling has not yet pushed unemployment higher, suggesting resilience in parts of the economy. BoE watchers will scan payrolls and wage trends for clues on rate moves this autumn.

The data point to a gradual tightening of conditions rather than a sharp shift. With vacancies backing off and pay growth persistent, employers face higher hiring costs even as demand eases. This mix could keep inflation in focus while offering a window for a cautious stance from the Bank of England. If wage growth cools further, the BoE might loosen policy; if not, rates could stay higher for longer.

Looking ahead, policy makers face a delicate balance. If wage growth stays sticky, inflation might resist falling, keeping interest rates higher longer. But a continued soft patch could open room for a cautious rate cut later this year, easing borrowing costs for households and firms.

Highlights

Autumn data will reveal whether the cooling trend holds and how policy responds