Recent surveys from Brightmine and Indeed show a slowdown in the UK job market. The UK is currently the only major economy with job openings below pre-pandemic levels. In the private sector, pay raises mostly averaged 3% in the three months leading to May. This is below the 3.4% inflation rate. About 15% of firms offered smaller raises of 2.5%, indicating caution from employers.

Job Vacancies and Graduate-Level Positions

Job vacancies in the UK dropped by 5% from late March to mid-June and are now 21% lower than before COVID-19. The number of graduate-level job ads has reached its lowest since at least 2018, with significant declines in HR, accounting, and marketing sectors. The demand for some roles may be decreasing, partly due to the impact of AI. Despite worries over rising social security costs, there are no signs of a significant drop in employment. This article describes the ongoing softness in the UK job market, with various signs of reduced hiring in white-collar jobs. Data from Brightmine and Indeed shows the UK’s decline is more pronounced compared to other developed economies. While job postings have slowed globally, the UK stands out as the only major market where vacancies have fallen below pre-pandemic levels, indicating weaker demand across various industries. In the private sector, pay raises have largely stalled at 3% through May. Since this is below inflation, real earnings are effectively decreasing. About 15% of firms even provided smaller raises of 2.5%, suggesting employers are tightening their budgets, which may signal a broader trend rather than just cautiousness.

Employment Trends and Future Outlook

Vacancies decreased by 5% from late March to mid-June, now sitting 21% below pre-COVID levels. This represents a notable gap, especially in industries that offer many entry-level professional jobs. Graduate job listings have dropped to their weakest point since at least 2018, particularly in human resources, accounting, and marketing—fields at high risk for automation. Artificial intelligence may be influencing these hiring trends, reducing the need for certain job functions, especially where decisions can be automated. Despite concerns about rising labor costs, including higher National Insurance contributions, there are currently no signs of significant job losses. Companies seem to be choosing not to hire more staff. For those trading in volatile markets or betting on changes in rates and inflation expectations, the message is clear: pay close attention to future employment data, especially at the sector level, since overall figures may overlook significant contractions. Market trends regarding interest rate changes in the coming months will closely follow new developments in wage growth or hiring. From a technical standpoint, the decline in vacancies and slowing wage growth suggests a downward pressure on short-term inflation figures, potentially leading to mild disinflation in the second half of the year. We should keep an eye on how wage data impacts unit labor costs in Q3. If wage growth remains weak, inflation swaps might start falling short of short-term CPI forecasts, allowing for favorable steepening positions under the right circumstances. The forward curve seems to underestimate the impact of lower job openings if this trend continues over the summer. Any future hawkish statements will need to be viewed within this context. In particular, shorter-term rate volatility may present unique opportunities as wage data is assessed. Stay tuned to sector-specific indicators, such as the ONS Vacancy Survey by industry and real-time private job board postings. These timely releases may signal upcoming changes in official data. We will continue to monitor movements in job-sensitive assets and trade accordingly. Create your live VT Markets account and start trading now.

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