KPMG comments on today’s labour market figures

“New year sees the labour market cooling” says Yael Selfin, Chief Economist at KPMG UK.

“Demand for staff is losing momentum, with employers pivoting away from hiring permanent staff to temporary placements as they become more cautious over the economic outlook. Following another fall in January, vacancies are now 166,000 below their peak in May 2022 – a drop of 13 percent, while the redundancy rate is back to pre-pandemic levels.

“Today’s data confirm that December was a big month for industrial action, with strikes leading to nearly 850,000 working days lost involving 170,000 workers. Nonetheless, the main pressure on the labour market still comes from structural challenges including declining workforce participation and ageing.

“Pay growth picked up again to rates not previously seen outside of the pandemic. This reflects general inflation spilling into pay demands as employees seek to mitigate the cost of living squeeze. However, regular pay growth could be around its peak already, and may average 6 percent over 2023, which would ease the pressure on the Bank of England to raise interest rates further.”

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