Vacancies fall again as private sector wage growth drops below 3% – ONS

Job vacancies have fallen back further as under-pressure small businesses rein in hiring in the face of rising costs and higher wage bills, according to official figures.The Office for National Statistics (ONS) said regular, average, wage growth in the private sector also fell below 3% for the first time since 2020, at 2.9% in the three months to May, down from an upwardly revised 3% in the previous three months.The latest figures showed there were 7,000 fewer vacancies in the quarter to June at 712,000, which follows a 19,000 drop in the previous three months.This was driven by smaller businesses, which saw vacancies fall 8,000, though this was partially offset by an increase among medium-sized firms, the ONS said.But the latest figures showed Britain’s overall rate of unemployment held steady at 4.9% in the three months to May, while the number of workers on UK payrolls fell by a better-than-feared 4,000 between May and June to 30.3 million.Despite the drop in private sector earnings growth, overall regular wage growth remained unchanged at 3.4% in the quarter to May thanks to a 5.5% increase across the public sector, which the ONS said was affected by the timing of recent NHS pay awards.Regular earnings also continued to outstrip inflation, up 0.4% with the Consumer Prices Index taken into account.Liz McKeown, ONS director of economic statistics, said: “The latest data show a relatively steady labour market picture overall, though some measures continue to suggest softening.”She added: “Vacancies fell again over the quarter, but by less than in recent periods.“The latest decrease was driven mainly by smaller businesses, where labour and operating costs were cited as factors in not taking on new staff.”The figures comes after the ONS recently admitted an error in the Labour Force Survey, which saw it accidentally allocate interviewers to the wrong survey.It warned last month this could skew jobs in the latest set of market statistics, although Ms McKeown assured its analysis “suggests the impact on our headline estimates is minimal”.Experts said the figures signal the worst of the jobs market decline may be over, but cautioned over a possible further hit if the ongoing Iran war sends inflation soaring.Read MoreMatt Swannell, chief economic adviser to the Item Club, said: “There are some signs that the deterioration in the labour market has bottomed out.“But we think this will prove a temporary respite, and with a sustained reduction in the use of Strait of Hormuz looking increasingly likely, we expect high energy prices to weigh on growth and the jobs market.”The ONS figures will be watched closely by policymakers at the Bank of England ahead of its interest rate decision on July 30.Thomas Pugh, chief economist at RSM UK, said steadying wages would likely cool inflation fears.He said: “A stale labour market that is still gradually loosening gives the Monetary Policy Committee space to keep interest rates on hold next week.“Unless oil prices rise back above 100 US dollars a barrel, we expect the committee to keep rates on hold for the rest of the year before resuming its downward trend in 2027.”