Natasha Kearslake, director of HR consultancy Organic P&O Solutions, told HR magazine that the latest stats showed employers' wariness about recruitment.
She said: “The economy’s traffic lights are on amber, and several indicators suggest that businesses are proceeding with caution, rather than slamming on the brakes.
“The unemployment rate is still above pre-pandemic levels, and might give employers a bit more breathing room when it comes to recruitment.
“Many sectors are still facing significant skills shortages. It's clear that some of the shifts we've seen in the labour market over the past few years are proving stubborn.”
The unemployment rate is down on the quarter and on the year, to an estimated 4.2% in April to June 2024. Meanwhile the employment rate increased 0.1% in the last quarter but was down on the year, and the number of payrolled employees increased by 0.1% on the month and 0.8% on the year.
Read more: How to give your employees a free pay rise
At the same time, annual growth in employees’ average regular earnings (excluding bonuses) was 5.4% in April to June 2024, and annual growth in total earnings (including bonuses) was 4%. ONS officials noted that the pay figures were down from this time last year due to the one-off bonuses paid to NHS staff in June 2023.
Vacancies continued to fall for the 25th consecutive period, but were still 11% higher than in January to March 2020. The report on jobs (8 August) published by KPMG and the Recruitment and Employment Confederation, showed there was a decline in temporary and permanent billings in the last month, while the demand in staff also dropped.
Ben Keighley, co-founder of AI recruitment platform Gaia (formerly Socially Recruited), explained that this showed employers were starting to increase recruitment.
He told HR magazine: “The job market is suffering from businesses' nervousness to make new hires as the number of vacancies in the UK continues to fall.
“However, a drop in unemployment is a positive step forwards, and suggests that confidence is slowly filtering back into the job market.
"The recent increase of payrolled employees in July is further evidence of this. While we are not fully out of the woods, these improvements suggest that businesses are cautiously optimistic about the future and are starting to invest in their workforce again."
Jonathan Firth, vice president and UKI recruitment solutions head at recruitment firm LHH, explained employers should offer competitive benefits as the job market slowly picks up.
He told HR magazine: “As sectors start to pick back up in terms of new vacancies, finding talent with the right skills is critical for employers.
Read more: Cooling labour market as high interest rates persist
“With inflation expected to rise, employers should ensure that they are staying competitive, with benefits that entice new joiners and continue to engage their top talent.”
Yesterday's CIPD Labour Market Outlook report (12 August) showed that pay growth expectations were at their lowest level since 2022.
The survey of 2,000 employers revealed that expected wage growth for the next year fell from 4% at the start of 2024 to 3% in the last quarter. This was down from 5% in 2023.
Jack Kennedy, senior economist at hiring platform Indeed, told HR magazine that tight wage growth could impact economic growth as a whole.
He explained: “Though wage pressures are gradually easing, the disinflation remains gradual with regular pay growth still running at 5.4% year-on-year.
“This may limit the amount of monetary easing the Bank of England is able to deliver over the coming months, potentially putting a brake on growth.”
