London’s labour market is stuck at a “standstill” as firms hold back expansion plans despite signs the UK economy is picking up pace, a new survey has shown.
Job vacancies and placements across the capital hit fresh lows through June as job openings recorded their 16th consecutive month of contraction, according to a survey compiled by S&P Global for KPMG and the Recruitment and Employment Confederation.
In its latest labour market pulse check, S&P Global recorded a reading of 47.6 for London’s jobs market. Any reading reading below 50 indicates contraction.
Permanent placements also slumped again to 46.6, with the latest figures marking 21 months since the last positive reading in September 2022.
Anna Purchas, vice-Chair and London Office Senior Partner at KPMG, said firms may have hit pause on expansion plans as the country was gripped by uncertainty surrounding the snap election in early July.
“London’s labour market has been at a standstill as employers delayed investment decisions until the outcome of the general election was decided,” she said.
“Despite a rise in candidates available for work, skills shortages in some sectors remain and employers are willing to pay a premium to secure the best candidates on the market.”
London’s job market is ‘”stuck in a rut” and ministers were right to prioritise getting people back into work, added Muniya Barua, deputy chief at business group, BusinessLDN.
The survey comes after official figures from the Office for National Statistics revealed an unexpected rise in unemployment around the country in the opening three months of the year.
According to the ONS’s figures, the rate of unemployment climbed to 4.4 per cent between January and March, the highest level since September 2021.
UK job vacancies more widely also fell by almost a fifth in June in a sign that economic growth had yet to “filter through to hiring”, according to research yesterday from jobs site Adzuna.
The numbers come despite a bumper period of growth for the UK economy which has outperformed predictions and surged ahead of other major economies.
In the first quarter, the economy grew 0.7 per cent, making it the fastest growing economy in the G7. After May’s GDP figures, which showed a 0.4 per cent expansion month-on-month, many economists think this could be repeated in the second quarter.
However, a slowdown in the labour market is likely to be among the chief concerns of the Bank of England’s as rate-setters decide whether to slash borrowing costs for the first time since March 2020 on Thursday.
The Bank has suggested that the labour market needs to slow before they consider unwinding interest rates.