Job vacancies fall below 700,000 for first time in over five years

Job vacancies in the UK have reached a five-year low, falling below 700,000 for the first time in over a year, according to the latest official data from the Office for National Statistics (ONS). The number of job vacancies decreased by 21,000 between July and September, reaching 691,000. The unemployment rate saw a slight decline to 4.7%, while wage growth slowed to 3.7% per annum, excluding bonuses.

Including bonuses, annual pay growth was still 3.7%, but below expectations. Smaller businesses are primarily responsible for the drop in vacancies, citing increased labour costs as a major factor. The ONS deputy director, David Freeman, noted the largest fall in vacancies since the beginning of the year, concentrated among smaller firms.

WPI Strategy's chief economist, Martin Beck, expressed concern over the drop, stating that the UK faces a prolonged jobs squeeze rather than an employment crisis. Economists believe a weaker jobs market could hinder the Bank of England's ability to raise interest rates to combat rising prices. CPI inflation is projected to reach 3.4% this month, above the Bank's target of 2%.

Policymakers are closely monitoring the situation, with some warning that a continued rise in energy prices could lead to an interest rate hike. However, the current high levels of joblessness and low vacancies suggest workers have less bargaining power to demand higher wages.