Unemployment rate rises and vacancies fall as employers 'tap the breaks' on hiring 

The figures, from the Office for National Statistics (ONS), signal a weakening job market as employers "tap the brakes" amid economic uncertainty.

The data shows vacancies in the three months to November stood at 1.2 million – the fifth quarterly fall in a row and the first annual fall since the beginning of last year.

Despite the fall, the ONS said job vacancies still remained close to historically high levels, but the dip could indicate uncertainty across industries, as respondents continue to cite economic pressures as a factor in holding back on recruitment.

Meanwhile, the number of payrolled employees rose by 107,000 employees (0.4%) in November, however there was also a 30,500 increase in jobless claimants, the data showed.

The ONS reported that regular pay in real terms, excluding bonuses, grew by 6.1% in the period, a slight increase from the 5.8% registered from July to September. But taking inflation into account, wages have actually fallen by 2.7%.

The rate of inflation hit 11.1% – a 41-year high – in October as it reflected the latest increases to energy bills.

The inactivity rate - people neither working nor looking for a job - fell by 0.2 percentage points to 21.5%, suggesting that people who had left the labour market are now re-engaging as the cost-of-living crisis takes hold.

"Vacancies are still at a very high level"

Sam Beckett, ONS head of economic statistics, said: “This quarter the proportion of people neither working nor looking for a job fell, driven by a drop in the number of working-age people regarding themselves as retired.

“This tallies with other data which suggest more people in their 50s are thinking of going back to work, at a time when the cost of living is rising rapidly.

“With more people re-engaging with the labour market, there were more in employment and also more who were actively looking for a job.”

“Though job vacancies are still at a very high level, they continue to fall and are now lower than they were a year ago.”

Economic difficulties 

Joanne Frew, Global Head of Employment & Pensions at DWF,  said: "Yet again the labour market figures have remained relatively steady during an incredibly challenging economic climate.  However as we look ahead we can expect the labour market will be impacted by the economic difficulties gripping the UK with more job losses over the coming months. 

"As the cost-of-living crisis takes its toll, the UK economy has contracted by 0.3% between August and October 2022.  With the Chancellor, Jeremy Hunt, warning that the UK economy will get worse before it gets better it is likely the labour market will face a relatively turbulent time as we enter 2023."

Recession may take some of the heat out of labour demand

Jonathan Boys, labour market economist for the CIPD, was more optimistic about the figures saying the fall in vacancies shows that employers are "tapping the brakes but are a long way off from heading into reverse".

"It takes months to recruit, so vacancies are a good leading indicator of what’s coming around the corner," he said.

"A recession may take some of the heat out of labour demand for some sectors, but sectors like health and social care are unlikely to be one of them, as pressure on the NHS continues to build.

The figures come as a wave of strikes sweep the country as workers across the transport network, NHS, Royal Mail and civil service  walk out in rows over pay and conditions.

The ONS said 1.1m days were lost to strike action since June,  said there were 417,000 working days lost because of industrial action in October, which is the highest since November 2011.

"Few people are seeing their pay keep up with rising prices as real earnings are down 2.7%, Boys said.

"Although inflation may have ‘peaked’, even as it comes down prices will still be going up. The cost-of-living crisis has some time to run yet. The Bank of England is likely to raise rates again on Thursday which will further thump the finances of householders with mortgages."