UK Jobs Market Contracts Further as Payrolls Fall July

The UK jobs market continues to weaken, with employment falling for the sixth consecutive month and job vacancies dropping to their lowest level since April 2021, as reported by the Office for National Statistics and supported by recruitment surveys from KPMG and REC. Payroll numbers fell by 8,000 in July, reflecting ongoing declines since February, while wage growth remains strong yet slowing, with private sector basic wage growth at 4.8% and average weekly earnings rising 5.0%, well above the Bank of England's inflation target. Economic uncertainty, increased labor costs including a higher employer tax, and global headwinds are causing businesses to pull back on recruitment, particularly in retail and hospitality, although sectors like construction and engineering show some resilience. Hiring activity, including permanent and temporary placements, declined sharply, with starting salary growth cooling to its lowest level in over four years. Experts emphasize that a coordinated effort among government, the Bank of England, and businesses is needed to stabilize the labor market and foster recovery amid these challenges. Despite these headwinds, some areas of the economy continue steady hiring, but overall, the UK labor market is experiencing contraction and cautious employer sentiment.