The UK jobs market has gone from strength to strength to slight contraction with payroll employment down 8,000 workers between June and July. Yet economists have argued that the overall job market has experienced a bust. The moderate nature of this decline may spark hope that the greatest threats are in the past. The unemployment rate is skyrocketing as grim realities set in, particularly across the hospitality industry. At last, we’re beginning to see such stabilization at least not as strongly in a tightening labor market.
Throughout the pandemic, the hospitality industry has seen some of the most extreme job losses. Much of this decline can be attributed to its reliance on low-wage workers. This sector has been particularly vulnerable, with many businesses struggling to maintain staffing levels as consumer behavior shifts and economic pressures mount. As we see from the most recent data, significant hurdles remain in the job market. There are signs of stabilization, albeit at a lower, unacceptable level.
The story is different in the labor market, where growth rate of private sector regular pay is holding up at 4.8% in last week’s report. This third bullet is not a negative—it’s actually a very positive sign of stability year-on-year. The month-on-month increase in pay growth was modest, pointing to an indication that wage growth is not outpacing inflationary pressures. Growth in private sector wages is projected by analysts to fall to 4% or less by the end of this year scenario. This steep drop is increasing worries over consumer spending’s staying power.
Despite the decrease in payroll employment, the volume of redundancy notifications sent to the government has barely increased in recent months. This is to say, firms are probably not doing major internal blood-lettings at the moment. This new reality may provide a beacon of hope for employment stability in fields beyond technology. Companies only need to inform governments of layoffs when they involve more than 20 workers at one location. This rule would then result in a gross underreporting of the true number of job losses.
This year, the unemployment rate in the UK has been trending upwards, mirroring economic concerns across the pond and beyond. Critics have questioned the reliability of the UK’s unemployment data across time. This has raised serious concerns about the accuracy of those reported figures.
The view from nowhiring.com adds another layer to the evidence of a jobs market that is cooling fast. Overall job openings in the UK have fallen off a cliff and show no indication of letting up. Vacancies in the UK have recently fallen off a cliff. This drop is even larger than what we’ve experienced here in other large economies – including the United States, France, and Germany. In fact, vacancies in almost every sector in the UK are now under pre-Covid levels.
This recent employment data indicates the sudden drop in payroll employment for the eighth time in nine months. This most recent drop is the smallest of all those drops. This would be an early signal of a possible inflection point, where job losses might start to stabilize instead of continuing to deteriorate.