- Unemployment edged back slightly to 4.9% in the three months to April
- Vacancy numbers fell to the lowest level in five years, with 2.5 unemployed people for every vacancy
- Economic inactivity edged up 0.3% on the previous quarter
Danni Hewson, AJ Bell head of financial analysis, comments on the latest UK jobs figures:
“Whilst the headline rate of unemployment has edged down slightly, pop the hood on the UK labour market and that good news is all but obliterated.
“The number of people starting new jobs has fallen to a five-year low, as has the number of vacancies. But a 0.3% jump in those classed as ‘economically inactive’ could mean much of the fall in unemployment will simply be the result of job seekers giving up or changing tack.
“It’s been tough for businesses to deal with domestic policies that have increased the cost of labour, especially for part-time roles, and the instability and cost increases associated with the conflict in the Middle East have resulted in many employers pressing pause on potential growth plans.
“That lack of confidence is tough to overcome, and there is a real fear that younger workers will be badly scarred by what could be a protracted period of weakness in the jobs market.
“Some job seekers have decided to go down the self-employment route, but the number of people with second jobs has fallen. This could be because cost of living pressures have eased, or perhaps because part-time roles have become more difficult to find.
“With 2.5 unemployed people for every vacancy, the labour market is tight. That gives employers cover to keep wage increases down and might explain why wage growth is unchanged at 3.4%. But that’s still an above-inflation increase, which effectively means those in employment are still being cushioned from rising prices.
“In the round, today’s jobs figures add to expectations that Bank of England rate setters will hold fire on making any changes to the base rate that could undermine an already fragile economy.”
