However, the economic inactivity rate decreased in the last quarter, and the number of payrolled employees continued to grow from the previous month.
Novo Constare, CEO and co-founder of temporary jobs listing platform Indeed Flex, told HR magazine that the labour market continued to cool in June 2024.
"The UK may be enjoying warmer summer temperatures but the labour market continues to cool,” he said.
“Job vacancies are falling and unemployment has ticked upwards for the fifth consecutive month.
“Overall, hiring has slowed and there are more people applying for fewer jobs, although highly skilled and experienced candidates are still in demand, in certain sectors.”
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The unemployment rate reached an estimated 4.4% in May 2024, up on the year and the quarter. Employment was down on the year and the quarter.
Natasha Kearslake, director of HR consultancy Organic P&O Solutions, suggested this showed that employers were cautious to recruit amid economic uncertainty.
Speaking to HR magazine, she said: “The economy has been cool, with some concerning trends for employers to watch closely.
"The unemployment rate has risen to 4.4% – above pre-pandemic levels. This suggests that businesses are becoming more cautious about hiring due to economic uncertainties.”
Meanwhile the number of vacancies decreased on the quarter, by 30,000, for the 24th consecutive period. This remained above pre-pandemic levels. The number of people receiving a benefit for being unemployed increased in June 2024 and was up on the year, to 1.7 million.
On the other hand, the economic inactivity rate decreased on the quarter, to 22.1% in March to May 2024, but increased from the same time last year. The number of payrolled employees for June 2024 also rose by 16,000 (0.1%) from the previous month and 241,000 (0.8%) from the previous year.
Ben Keighley, founder of AI recruitment firm Gaia (previously Socially Recruited), explained that the fall in vacancies was due to the sustained high interest rates, which were announced on 17 July.
“For now, business confidence remains on a knife edge as the Bank of England continues to toy with the idea of whether or not to cut interest rates,” he told HR magazine.
“This state of flux is proving detrimental to job creation and explains why we have not yet seen an uptick in new vacancies, which have been falling for two years.
“The new Labour government will be hoping that a change in monetary policy and a cut to interest rates will eventually turn the tide and encourage businesses to start hiring again.
“Until then, many firms are content to play the waiting game, putting major investment and recruitment plans on hold until a clearer economic picture emerges.”
Read more: Recruitment declines while labour supply jumps
The annual growth in average regular earnings (excluding bonuses) and the annual growth in total earnings (including bonuses) were both 5.7%. Annual growth in real terms for regular pay was 2.5% in March to May 2024 and 2.2% for total pay.
Jack Kennedy, senior economist at jobs posting platform Indeed, said this reflected the continued competition for talent.
He told HR magazine: “Posted wage growth in lower-paid categories is particularly strong, reflecting the recent large minimum wage increase and continuing tightness in hiring conditions.
“Posted wage growth for the lowest-paid third of occupations is running at 7.8% annually, though it has also ticked up for mid- and high-wage jobs.”
He noted the labour market statistics could lead to a cut in interest rates in August.
“Today’s labour market figures were in line with expectations, leaving prospects for an August rate cut in the balance,” he added.
ONS has changed its methodology for calculating labour market statistics. The change includes an increased sample and response rate for the Transformed Labour Force Survey (TLFS). Changes to the TLFS are ongoing alongside an increased sample for the Labour Force Survey.
