“Signs of cooling labour demand underscores a dwindling economic growth momentum” says Yael Selfin, Chief Economist at KPMG UK.
“Vacancy rates have generally impacted pay growth this year, with most sectors with higher vacancy rates experiencing stronger pay growth, reflecting recruitment and retention efforts by firms in a tight labour market. Now that the tide has turned, we expect less pressure on pay. Our forecast points to regular pay growth averaging 7.2% in 2023 and 4.9% in 2024. Annual regular pay growth was 7.8% in August, with growth of 8% in the private sector.
“The latest data indicates that some of the sharpest falls in vacancies have been in sectors which reported persistent skill shortages, including IT and finance. This may signal that the battle for talent has run its course. The overall number of vacancies in September was 314,000 (24%) down since the peak in the middle of last year.
“While the overall momentum of the economy is weak, the expected easing of inflation, coupled with earlier pay awards and the increase in the National Living Wage, should provide further improvements in consumers’ purchasing power and help alleviate the pressure on households.”
