(Bloomberg) — UK online job advertisements slipped below pre-Covid levels for the first time in almost two years, adding to evidence that Britain’s red-hot labor market is cooling in a recession.
A sharp slowdown in manufacturing hiring led to a 16% drop in total job ads in the first week of January compared to a year earlier in another sign of the jobs boom easing, the Office for National Statistics said Thursday.
Vacancies were at the lowest since April 2021, when the UK was emerging from a pandemic lockdown. Online ads were 3% below the previous week and slipped in all UK regions except Northern Ireland.
UK businesses have struggled to fill empty roles after a wave of workers dropping out of the jobs market since the pandemic, adding to wage pressures and causing more inflation headaches for the Bank of England. Vacancies have hit record levels, tipping the balance of power toward workers. But employer demand is now easing.
Adverts in the HR and recruitment sector slumped by almost a fifth compared to the previous week, the largest drop of any industry followed by energy. However, the ONS urged caution on the figures as January is typically a slower month for hiring.
City of London economists have warned that the tight jobs market will keep the pressure on the BOE to increase interest rates again next month despite some signs of a cooling in employer demand.
“With year-over-year growth in wages still too rapid, we think it will press on and raise Bank Rate by 50 basis points in February, before standing pat in March, when clearer evidence should have emerged that labor market slack is increasing,” said Samuel Tombs, chief UK economist at Pantheon Macroeconomics.
Forecasters expect UK unemployment to pick up from its current low level of 3.7% but still peak far below the rate seen in previous recessions.
Earlier this week the Recruitment & Employment Confederation revealed that vacancies increased at their slowest pace since February 2021 while wage growth was its weakest in 20 months.
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