“The UK’s jobs boom continues to be a big plus point for the economy, but it is slowly losing momentum.”
That is the view of Taj Parikh, Chief Economist at the Institute of Directors in the wake of today’s new labour market data released by the Office of National Statistics.
Figures show the nation’s unemployment rate remains unchanged from the previous quarter at 3.8%, although this does represent a 0.3% reduction on 12 months ago.
Employment rates showed a similar pattern, with today’s rate of 76.2% amounting to a 0.4% drop on the corresponding time last year, but unchanged against the previous quarter.
The ONS statistics did, however, show a sharper drop in the amount of vacancies currently available; there were 794,000 unfilled roles in the UK between September and November, which is 20,000 fewer than the last quarter and 59,000 fewer than a year earlier.
ONS Head of Labour Market and Households David Freeman said although employment and pay are still growing, rates have slowed.
He said: “While the estimate of the employment rate nudged up in the most recent quarter, the longer-term picture has seen it broadly flat over the last few quarters.
“Vacancies have fallen for ten months in a row and are now below 800,000 for the first time in over two years.
“Pay is still increasing in real terms, but its growth rate has slowed in the last few months.”
The IoD responded to the latest figures by revealing many firms are reducing the numbers of new staff they are currently taking on – a move driven in part by a shortage of relevant skills. That could mean an end to the recent jobs boom, the body warned.
Tej Parikhof said: “Businesses have shown a strong appetite to take on staff in recent years, and climbing employment levels have boosted household incomes, adding buoyancy to the economy.
“However, firms are now cutting back on new hires as it becomes harder to find the skills they need.
“Uncertainty and slowing global growth have also made businesses a bit more cautious in their recruitment plans, and vacancies are expected to continue falling into 2020.
“As demand for new workers has slowed, it is also inevitable that wage growth has also decelerated a little recently. Many smaller firms have been struggling under the weight of high costs and regulations, which has restrained their ability to push pay packets even higher.
“With some strains now appearing in the labour market, the new Government must push ahead with its plans to revamp the UK’s skills system, while initiatives to drive up business productivity should also support stronger wage growth.
“Businesses are eager for the details behind flagship policies like the National Skills Fund and reform to the Apprenticeship Levy.”