Jobs market flatlines as companies brace for Labour’s nationwide insurance coverage bomb: Vacancies stall and unemployment fee sticks amid warnings of ‘uneven waters’ to come back
Official figures today showed the jobs market on hold as businesses brace for Labour’s national insurance bomb.
Vacancies were effectively stalled in the three months to February, as experts warned there is little sign of ‘momentum’ as ‘choppier waters’ loom.
Unemployment also remained stuck at 4.4 per cent in the quarter to January, although there have been significant problems with collecting data.
In a glimmer of better news, numbers on payrolls were up 21,000 last month to 30.4million.
There looks to be little hope the Bank of England will cut interest rates to help kick-start flagging economic growth, with wages still increasing at the fastest pace since last April. The Monetary Policy Committee is expected to keep rates on hold at its latest meeting at noon.
Rachel Reeves‘ hike to NICs for employers is due to take effect next month, with businesses warning they be forced to increase prices and cut back on staff.
There is also mounting alarm at the impact of Donald Trump‘s trade war, with fears it will hammer global growth and drive inflation.
Rachel Reeves ‘ hike to NICs for employers is due to take effect next month, with businesses warning they be forced to increase prices and cut back on staff
Vacancies were effectively stalled in the three months to February, as experts warned there is little sign of ‘momentum’ as ‘choppier waters’ loom
Unemployment remained stuck at 4.4 per cent in the quarter to February, although there have been significant problems with collecting data
Vacancies were down from an average of 821,000 in November to January to 816,000 in December to February. For non-overlapping quarters they were up 1,000.
ONS director of economic statistics Liz McKeown said: ‘Overall pay growth remains relatively strong, with pay growth high in both the public and private sectors, despite the latter slowing slightly in the latest period.
‘The wider labour market picture is relatively unchanged, with the number of employees on payroll broadly flat in the latest period and with little growth seen over much of the last year.
‘Unemployment, as measured by the Labour Force Survey, and the Claimant Count have both increased slightly in the latest periods, though caution continues to be advised with the survey estimates.
‘Initial estimates show that the number of vacancies is little changed on the previous quarter, remaining just above pre-pandemic levels.’
The UK unemployment rate remained unchanged at 4.4 per cent in the three months to January, although the ONS reiterated caution over the statistic due to problems with the jobs survey. On non-overlapping quarters the level was up by 0.1 percentage points.
The ONS said regular average annual wage growth was unchanged at 5.9 per cent in the three months to January, staying at the highest level since the three months to April last year.
Wages outstripped headline CPI inflation by 3.2 per cent, the ONS added.
The ONS said regular average annual wage growth was unchanged at 5.9 per cent in the three months to January, staying at the highest level since the three months to April last year
Shadow Work and Pensions Secretary Helen Whately said: ‘I am disappointed that unemployment has gone up again.
‘This is the inevitable outcome of Labour’s jobs tax and mission to smother businesses with red tape.
‘With growth down, borrowing up and business confidence in free fall, Rachel Reeves must take urgent action in her emergency budget in six days’ time.’
Suren Thiru, Economics Director at ICAEW, said: ‘These figures suggest that the UK’s jobs market had little momentum even before next month’s twin hit of rising National Insurance and National Living Wage costs, as free-falling business confidence continues to curtail recruitment activity.
‘Elevated wage growth is a double-edged sword for the economy because, while it’ll help boost consumer spending – a key driver of economic growth – it may limit the pace of interest rate cuts by fuelling fears over rising inflation.
‘The UK’s labour market may soon slide into choppier waters as April’s sizable surge in business costs and a flagging economy could well trigger both moderately higher unemployment and weaker pay settlements.
‘While an interest rate hold at lunchtime today looks inevitable, the vote split and tone of the meeting minutes could well offer hope of another policy loosening sooner rather than later, probably in May.’
