Job vacancies and starting salaries ‘fall for first time this year’ amid rate rise hit
There are potential early signs the labour market is losing some of its inflationary heat, in a shift that could give the Bank of England reason to pause its cycle of interest rate hikes.
Data from a jobs search website suggested vacancies and advertised starting salaries both fell in July – the first monthly decline for both elements this year.
Adzuna’s latest report gives some evidence the Bank’s action against inflation is working.
Policymakers are particularly concerned about wage growth becoming a driving force of inflation in the months ahead.
They fear wage rises to keep up with the pace of price growth will only increase demand in the economy and provide upwards pressure on inflation.
Official data published last week showed basic wages rose at the fastest pace since at least 2001 in the three months to June.
That stat also reflects the effects of the tight labour market that has seen employers forced to offer glittering sums to retain and attract talent.
The Bank has acted against inflation, driven mostly by the effects of Russia’s war in Ukraine, through 14 consecutive interest rate rises.
The most recent hike earlier this month saw Bank rate hit 5.25%, piling further misery on borrowers.
Financial markets currently see the rate peaking at around 6% early next year despite the headline rate of inflation easing sharply to 6.8% in July.
Adzuna’s survey is a possible, early sign, the Bank’s tightening is having the desired effect
It also suggested employers were turning more cautious about hiring.
Vacancies dropped by 1.11% to 1,047,000 while average salaries were down 0.15% at £37,750 compared to June, both reflecting the tougher economy that is also pushing up the jobless rate.
The report also showed employers were becoming more secretive about pay rates, with over half of adverts not disclosing salary details for the first time.
London drove the advertised wage reduction last month, falling 1.2%, while Northern Ireland saw the biggest leap.
Cambridge remained the top UK city with the least competition for jobs, with 0.25 jobseekers per vacancy.
Andrew Hunter, co-founder at Adzuna, said: “The UK jobs market has entered its summer slowdown period with vacancies down, advertised salaries down and the time to fill roles increasing.
“Whilst it’s natural to see vacancies fall during the summer months, as companies traditionally slow hiring, the early figures for July’s jobs data will demonstrate to UK policymakers that inflation truly should be on a downward trajectory.”