This followed pay growth reaching its lowest increase in two years in October 2024.
At the same time, vacancies continued to decrease for the 29th consecutive period, to 818,000 between September and November.
The unemployment rate also increased to 4.3% in August to October 2024, up on the year and in the latest quarter.
This showed businesses were taking a “cautious approach to workforce planning”, Jeanette Wheeler, chief HR officer at HR software company MHR, told HR magazine.
The employment rate increased in the last quarter to 74.9%, according to the ONS statistics, and the economic inactivity rate was down on the year and in the last quarter.
However, the number of payrolled employees simultaneously fell by 0.1%.
The fall in payrolled employees showed the increase in employers’ national insurance contributions, announced in the Autumn Budget, had already impacted hiring, according to Kevin Fitzgerald, managing director of HR platform Employment Hero.
Read more: 'No man’s land' economy slows hiring and hinders pay growth
Speaking to HR magazine, he said: “The figures show the disastrous decision to tax employment is already costing jobs.
“A continued fall in job vacancies and people in employment indicates that employers are pulling back on bringing fresh talent into their organisations and are taking clear action to protect their bottom lines. This could lead to a period of little to no growth in the UK in 2025.”
The purchasing managers’ index (PMI) was more reflective of the “alarmist” state of the labour market, Natasha Johnson, director of HR consultancy Organic P&O Solutions, told HR magazine.
She said: “The PMI survey released yesterday strikes a more alarmist tone, finding that UK businesses are cutting staff numbers at the fastest rate since the global financial crisis.
“HR teams should ensure they’re using in-house data to focus on their own workforce trends rather than relying on national statistics.”
Read more: ONS delays new labour force survey: HR reacts
Concerns have been raised with the accuracy of ONS labour market statistics in recent years, and this set of ONS data noted that the “increased volatility” of its labour force survey (LFS) estimates should be “treated with additional caution”.
The current response rate to the LFS was 14.6% in October 2023, according to report in The Financial Times at the time, down from 40% in 2019.
At the start of this month, ONS announced it would delay its improved labour force survey (LFS) to 2027.
A review by the UK Statistics Authority, published on 12 December, suggested 14 statistical outputs of the current LFS and the associated annual population survey (APS) are not fit for purpose. These outputs have had their accreditation temporarily removed.
The lack of reliability of ONS labour market data has contributed to employers’ caution towards hiring, commented Michael Stull, director at recruitment firm ManpowerGroup UK.
Speaking to HR magazine, he said: “The unreliability means there is a lack of confidence in how the Bank of England is going to respond with its interest rates each month.
“It adds to overall economic uncertainty and to the hiring recession we’ve been seeing in the labour market, with employers holding back on their hiring plans.
“This uncertainty is affecting all decision-makers in the recruitment chain from HR to the C-suite. It’s having the opposite effect in terms of encouraging the economic growth and investment that the UK desperately needs.”
Stull called on the ONS to swiftly resolve its issues with the LFS to support businesses.
He continued: “It’s why we’re calling for a faster resolution to the ONS survey changes and why we’re urging businesses that can do, to continue investing in skills as much as possible to help increase productivity.”
