UK interest rate rises are taking the labour market off the boil
There are signs the Bank of England’s interest rate rises are making businesses think twice about hiring staff, bringing down the number of vacancies.
Pushing in the same direction, the high cost of living is driving more people back into the workforce.
The effect shows up in the latest labour figures from the Office for National Statistics (ONS) as a fall of 55,000 in the number of vacancies in the three months to April and a 156,000 drop in the number of inactive workers.
Separate HMRC figures showed a 136,000 fall in PAYE employees between March and April – the first reduction since February 2021.
Put together, these figures tell us the UK’s pressure-cooker labour market – with lots of advertised jobs and too few workers to fill them – has begun to come off the boil.
When the Bank of England’s main concern relates to the tightness of the labour market, which is reflected in a high vacancy rate, then these trends will be welcomed by anyone who wants interest rates to fall and growth to pick up.
Businesses welcomed the fall in vacancies, even though the trend is partly due to firms going out of businesses or being too worried to hire new staff.
What they haven’t welcomed is the continuing mismatch between the skills they need and the people looking for work.
The British Chambers of Commerce head of people policy, Jane Gratton, made this issue the main focus of her comments.
“Skills shortages and unfilled job vacancies are the stark reality for many businesses across all sectors and regions,” she said.
“We still have more than a million job vacancies which are damaging the economy by preventing firms from fulfilling order books and taking on new work.”
Kitty Ussher, the chief economist at the Institute of Directors, added: “There
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