Recent surveys by Brightmine and Indeed reveal a slowdown in the UK labour market. The UK is the only major economy with job openings below pre-pandemic levels.

In the private sector, pay deals were mostly at 3% in the three months to May, which is less than the 3.4% inflation rate. About 15% of firms offered pay raises of 2.5%, showing cautiousness among employers.

Job Vacancies and Graduate-Level Positions

Job vacancies in the UK fell by 5% from late March to mid-June and are 21% below pre-COVID-19 levels. Graduate-level job ads hit their lowest point since at least 2018, with notable declines in HR, accountancy, and marketing sectors.

There may be a reduced demand in some roles due to AI’s impact. Despite employers’ concerns over increased social security costs, there are currently no signs of an employment slump.

This article outlines ongoing softness in the British employment market, with multiple indicators now pointing to reduced hiring appetite across white-collar roles. According to data from Brightmine and Indeed, the shift is more noticeable compared to other developed economies. While job postings have moderated globally, the UK stands out as the only major market where vacancies have dropped beneath pre-pandemic levels, implying cooling demand across a broad range of industries.

In the private sector, pay awards have largely stagnated, sitting at 3% through to May. As that figure remains below headline inflation, real earnings are effectively shrinking. That squeeze is reinforced by the detail that around 15% of surveyed businesses opted to give even smaller increases—2.5%—suggesting employers are starting to rein in wage growth. This cautiousness likely signals a broader trend of tightening budgets rather than isolated prudence.

Employment Trends and Future Outlook

Vacancy numbers dropped 5% from late March through mid-June, and they now sit 21% below levels seen before COVID-19 disruptions. That’s a large gap. Importantly, that decline has been sharper in industries once considered entry-points for professional careers. Graduate job listings have slumped to their weakest point since at least 2018. Weakness has been most pronounced in human resources, accounting, and marketing—roles which often involve structured tasks and may be susceptible to automation.

Artificial intelligence could well be driving this recalibration in hiring patterns. The technology is gradually reducing the need for certain job functions, especially where decision-making can be increasingly done by algorithms or automated systems. While employers continue to express discomfort around policy changes linked to labour costs—including higher National Insurance contributions—there’s no current indication of widespread job shedding. Instead, companies appear to be opting not to expand.

For those of us trading volatility or engaging in directional plays on rates and inflation expectations, the message is clear. Stick close to forward-looking employment indicators, particularly sector-level data, since top-line figures may gloss over the areas of meaningful contraction. Market pricing of rate moves in the coming quarters will closely track any fresh deterioration in wage growth or hiring.

More technically, softness in vacancies and slowing wage momentum point toward a compressive pressure on short-end inflation prints, and potentially mild disinflation over the second half. We should monitor how the wage data feed through unit labour cost metrics in Q3. If they stay muted, inflation swaps could start underrunning near-term CPI forecasts, leaving room for steepener positions under the correct conditions.

The forward curve appears to be underpricing the extent of the drag from reduced job openings if this persists through the summer. Any future hawkish rhetoric will need to be discounted in the context of this trend. Particularly, the front leg of shorter tenor rate vol may offer asymmetric opportunities as wage readings are digested.

Stay alert to sector-specific proxy indicators, such as the ONS Vacancy Survey by industry, as well as private job board postings with a real-time feed. These higher frequency releases may pre-empt turnarounds in official data series. We’ll continue to track implied moves on job-sensitive assets and trade accordingly.

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