Myron Jobson comments on the latest ONS labour market stats as credit tightening, rising interest rates and rampant inflation weigh on business confidence.
Commenting, Myron Jobson, Senior Personal Finance Analyst, interactive investor, says: “Unemployment has edged higher as a triple whammy of credit tightening, rising interest rates and rampant inflation weigh on business confidence. Higher interest rates up the cost of borrowing, which makes it harder for companies to access capital to help fund hiring and make investments to stimulate business growth. While consumer spending remains somewhat resilient, it still lags behind inflation, which may rob businesses of even more growth to keep expanding.
“The job market has remained remarkably robust and resilient amid ongoing economic uncertainty, but the latest labour market figures suggest that the post-pandemic hiring sugar rush is abating, with job vacancies falling on the quarter for the 10th consecutive period in February to April 2023. Job openings have fallen in 14 out of 18 industry sectors, suggesting that many employers are reining in their recruitment over concerns [about] the UK’s economic picture. With borrowing costs on the up and inflation remaining rampant, the job market faces no shortage of headwinds.
“There has been a notable increase in people finding work or looking for it, evidenced by a 0.4% dip in the UK’s economic inactivity rate on the quarter to 21% in January to March Jobseekers have been reaping the benefits of the most robust labour market in recent history. Regular pay remains among the highest growth rates seen outside of the coronavirus pandemic period as employers seek to attract and retain talent. But the booming labour market has fuelled the inflation fire, which calls into question whether workers were truly getting ahead. When adjusted for inflation, total pay (including bonuses) fell by 3% and 2% for regular pay.”
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