UK companies are holding back on hiring or are not replacing departing workers, sending job vacancies tumbling, official figures suggest.
The number of available jobs fell by 63,000 between March and May while the unemployment rate ticked higher.
“There continues to be a weakening in the labour market,” said Liz McKeown, director of econonic statistics at the Office for National Statistics (ONS), adding that there had been a noticeable drop in the number of people on payrolls.
In April, National Insurance Contributions paid by employers increased while a rise in the minimum wage came into force.
The estimated number of available jobs fell to 736,000 over the three months to May.
“Feedback from our vacancies survey suggests some firms may be holding back from recruiting new workers or replacing people when they move on,” said Ms McKeown.
The figures also showed that the unemployement rate rose from 4.5% to 4.6% – the highest in almost four years and could rise higher, according to Yael Selfin, chief economist at KPMG UK.
“It is likely that businesses will look to offset some of the rise in employment costs through a combination of reducing headcount and slowing hiring activity,” she said.
“Given this, we expect the unemployment rate to edge higher over the coming year.”
The rise in average wages slowed to 5.2% between February and April, easing from a 5.6% increase. However, it remains above the rate of inflation, which increased to 3.5% for the year to April.
While Capital Economics said the UK jobs market was “not collapsing”, its deputy chief UK economist Ruth Gregory said: “Most indicators show labour demand is clearly weakening.”
The number of people on payrolls fell by 55,000 between March and April and is forecast to drop a further 109,000 in May.
Although the ONS cautioned that this is an early estimate and could change when more data from HM Revenue & Customs becomes available.
