The UK jobs market has been cooling as vacancies fell and the number of people on payrolls dropped, the latest official figures suggest.
The Office for National Statistics (ONS) said job openings dropped by 5.8% to 718,000 between May to July across nearly all industries.
It stated that there was evidence that some companies may not be recruiting new workers or replacing people who have left.
However, the slowdown was not as sharp as some economists had anticipated.
Average wage growth remained at 5%, the unemployment rate was unmoved at 4.7% and an estimated drop in people on payrolls – down 8,000 between June and July – signalled a “very gradual cooling”, according to former Bank of England policymaker Andrew Sentence.
He pointed out that there are more than 30 million people on employer payrolls in the UK.
The ONS has said payroll numbers should be treated with caution and it is taking additional steps to address concerns about the quality of the data.
Nevertheless, Ashley Webb, UK economist for Capital Economics, said the “modest fall” in payroll data “suggests that the fallout in the jobs market from the rise in business taxes and the minimum wage” is calming down.
In April, the National Living Wage rose from £11.44 to £12.21.
At the same time, National Insurance Contribution by employers rose from 13.5% to 15% while the salary threshold triggering payment by firm was lowered from £9,100 a year to £5,000.
Job vacancies were at their lowest level since the three months to April 2021, when the UK was dealing with the effects of the Covid pandemic.
Outside the pandemic, the last time that vacancies were lower was in the three months to January 2015.
Liz McKeown, director of economic statistics at the ONS, said: “The number of employees on payroll has now fallen in 10 of the last 12 months, with these falls concentrated in hospitality and retail.
“Job vacancies, likewise, have continued to fall, also driven by fewer opportunities in these industries.”
However, although the number of job openings fell, it did not feed through to a rise in the unemployment rate, Mr Webb said.
He added that firms giving notice of redundancies was “relatively subdued” in July.
Employment minister Alison McGovern said the government was “determined to see unemployment fall” by “joining up work, health and skills support and transforming job centers to focus on genuine support”.
