With vacancies hitting a new record high and unemployment dropping below its level prior to the pandemic, the latest ONS figures show a labour market tightening further still. But another rise in inactivity (with participation among the over 50s remaining a key concern) means it’s not all good news and hiring conditions remain challenging for employers. More timely job postings data from Indeed continue to show strength in demand for new workers, albeit plateauing at a high level so far in March rather than making further advances.
Downside risks to the economy have risen after the invasion of Ukraine, though the labour market starts from a relatively strong position to withstand some turbulence. However, the real earnings squeeze is already visible in the ONS data. Regular pay was down 1% y/y in real terms in the three months to January, with consumer price inflation set to spike much higher still over the coming months as energy prices soar.
