Permanent job openings in the UK are decreasing at the fastest rate in four years
UK job market data paints a bleak picture as experts plan to study how the rise in National Insurance contributions (NICs) affects hiring.
A new survey shows that job openings for permanent positions in the UK dropped at the fastest rate in four years last month, adding to the gloomy economic outlook.
With unsettled markets and weak economic data, the latest jobs report from KPMG and recruitment firm REC reveals that many companies are hesitant to hire.
The survey of employers found that permanent job vacancies fell at the fastest rate since August 2020, when the UK was dealing with the Covid pandemic. Temporary job vacancies also declined in December.
The job market had been slowing for most of 2024, and December marked the 14th consecutive month of declining job openings.
The number of job openings has decreased the most in the executive/professional and IT sectors among permanent jobs.
Some employers, especially in hospitality and retail, are concerned that the government’s planned £25bn increase in national insurance contributions (NICs) starting in April will reduce hiring.
Jon Holt, the CEO of KPMG, said: “As we start the new year, the UK job market is slow. Hiring might continue to be cautious in the short term as businesses adjust to higher employment costs, slower interest rate cuts, and rising inflation.”
However, he believes the situation could get better in the coming months. The survey showed wages are still rising quickly, indicating there is still demand for workers.
“As the UK economy improves in 2025, businesses will need new workers. The highest wage growth in four months shows they are still willing to compete for talent,” Holt said.
Policymakers are closely watching how the NIC increase, a major part of Rachel Reeves’s October budget, will affect hiring and inflation in the coming months. The Bank of England mentioned last month that government policies have added “extra uncertainty” to the economic outlook.
A sell-off of bonds at the start of the new year has caused the yield on 10-year government bonds to rise above 4.8%, the highest it has been since the 2008 financial crisis. This has raised new concerns about the country’s financial health.
The Office for Budget Responsibility (OBR) is working on a new economic forecast, which will be released on 26 March. The Chancellor will need to react to the OBR’s forecast and may have to reduce spending if the report shows she might break her financial rules.
New inflation data will be released next week.
Published: 9th January 2025
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