UK Labour Market Showing Signs of Cooling

The UK Labour Market Review: May 2023

Published on May 15, 2023

Written by Elena Magrini & Rob Slane

The UK Labour Market Review

The April Labour Market Overview from the Office of National Statistics (ONS) pointed to a number of interesting happenings in the labour market, including:

  • A slight rise in unemployment of 0.1%

  • A 47,000 fall in the number of estimated job vacancies

  • 6.6% wage growth, but still well below inflation

In this month’s Lightcast UK Labour Market Review, we use our Job Posting Analytics to offer some real-time insights into some of these trends, plus an exciting look at which skills are seeing the fastest growth in advertised salaries in online employer postings.

Drop in job postings points to a cooling of the labour market

In last month’s Review, we wrote that there appears to be a slight cooling off of employer demand compared to much of the previous two years growth, albeit a slowdown, rather than a fall.

This month’s data not only confirms the cooling-off assessment, but also shows that there has now been a fall in postings. After three months of new postings being around 1.1 million per month, April saw 107,000 fewer postings than in March, which represents a drop of 9.7%. In the chart below, we’ve taken a three-month rolling average, in order to smooth out some of the sharp monthly fluctuations that sometimes appear in the data, but even after this correction we still see a fall in postings of 3.4%.

All of this suggests that we may expect a further cooling in the labour market in the next ONS release.

Advertised salaries only growing at the lower end of the labour market

When we look at median advertised salaries in job postings in April, we can see that it has stayed stable since March, at just shy of £32,500. However, as we’ve pointed out in previous pieces, whilst we have seen a general upward trend over the last year-and-a-half, it has not been enough to compensate for the large growth in inflation we’ve seen over the past 12 months.

There is a very interesting phenomenon when we dig below the headline figure to look at salaries offered for graduate versus non-graduate roles. For the second consecutive month in a row, advertised salaries for graduate jobs have decreased and are now back to the level seen in February 2021 (£39,100). In contrast, median advertised salaries for other jobs have continued to grow, reaching an all-time high of £26,400 in April.

Labour market hotspots across the country

In most of our previous pieces, we have shown the top 20 hotspots in the country for growth in job postings month-on-month. This month, however, there are only 17 large areas that have seen growth overall in their number of postings compared to last month (“large areas” are here defined as those that had at least 2,500 new job postings in March). Even in these areas, the scale of growth is considerably smaller than what we’ve seen in previous months, which is again indicative of a cooling in the labour market.

The top spot this month goes to Shropshire, which has seen month-on-month growth of 11%, followed by Cornwall (7%) and Sandwell (5%). In contrast, some places have seen significant falls, including two of the places that were in the top 5 last month – Glasgow and Reading – highlighting the often sharp fluctuations in recruitment activity we see on a monthly basis.

Looking at growth in employer demand for graduate job postings, here the situation is even more stark. Just six large areas have seen growth (here, “large areas” are defined as those with at least 1,000 graduate job postings in March 2023). Among these areas are Stevenage with 8.2% growth, followed by Stoke-on-Trent (4.9%) and Stockport (1.1%).

What skills subcategories have seen fastest growth in salary over the past year?

Each month we finish off our Review with a chart looking at a noteworthy feature of the labour market beyond the sorts of trends we’ve discussed above. This month, we’re looking at skills subcategories mentioned in job postings, and in particular ones which have seen the fastest growth in advertised salaries over the past year (this analysis only looks at skills subcategories that appeared in at least 1% of job postings in 2021).

What we find is that digital skills lead the pack, with seven out of ten top subcategories relating to these sorts of skills, including scripting languages, version control skills, and JavaScript and Jquery, all of which saw growth in advertised salaries of more than 14% over the year. Beyond digital skills, also noteworthy is the growth in advertised salaries for skills such as plant operations and management, and home healthcare and assisted living.

Elena Magrini, Lightcast's Head of Global Research commented:

"We’ve been seeing indications for the past few months of a cooling off of employer demand. But the data we see in April really seems to confirm that, with the number of job postings dropping by over 100,000 from March. Interestingly, this decrease seems to be driven by a fall in demand for graduate jobs, which declined by 4.0% month-on-month compared to a fall of 2.8% for other postings. Alongside the fact that we have also seen a decline in advertised salaries for graduate jobs back to levels seen in February 2021, it looks the cooling in the labour market is disproportionately affecting higher level jobs."

We’ll be back with another UK Labour Market Review in June, around the time of the next ONS Labour Market release.

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