The UK labour market continued to lose momentum over the summer, with job vacancies dropping for the 37th consecutive month, according to new figures from the Office for National Statistics (ONS).
Between May and July, the number of vacancies fell 5.8% to 718,000 — well below pre-pandemic levels. The ONS said almost every sector experienced a decline, with many employers holding back from recruitment or choosing not to replace departing staff.
Annual pay growth, including bonuses, also slowed during the period, falling from 5% to 4.6% as companies moved to curb costs. Despite these signs of cooling, the unemployment rate remained steady at 4.7% in the three months to June.
Liz McKeown, ONS director of economic statistics, said the data “point to a continued cooling of the labour market,” reflecting both weaker hiring demand and a cautious approach from employers amid economic uncertainty.
Sheila Flavell CBE, chief operating officer at FDM Group, said the downturn underscored the need for targeted investment in workforce skills to maintain the UK’s competitiveness. “The pace of technological change means that demand for certain skills, particularly in artificial intelligence, remains strong,” she said. “This is a moment for businesses and policymakers to prioritise skills development… By focusing on experiential learning, adaptability to tech evolution and inclusion at all levels, we can safeguard both economic growth and individual career prospects.”
Concerns have also been raised over the impact on younger workers. The Chartered Institute of Personnel and Development (CIPD) warned that young people are being disproportionately affected by the slowdown, with hiring intentions among businesses now at record lows.
Separate data from KPMG and the Recruitment and Employment Confederation (REC) revealed that July saw the sharpest fall in both permanent and temporary job placements since April. The decline coincided with an increase in people re-entering the workforce, as well as more graduates seeking employment, adding to competition for a smaller pool of available roles.
The figures suggest the UK labour market is entering a period of subdued growth, with employers cautious about expanding their workforce amid economic headwinds. While demand for specialist skills — particularly in technology — remains resilient, the broader slowdown is prompting calls for urgent measures to strengthen skills training and support for jobseekers.
