LONDON, Feb 21 (Reuters) - The number of job postings in the United Kingdom rose for the first time in seven months in January, according to a survey released on Friday, indicating resilience within the country's job market amid higher employer taxes.
The Recruitment & Employment Confederation (REC) reported total active job postings increased to 1.52 million, up by 7.2% from December. This uptick marks the first month-on-month increase since June of the previous year. Interestingly, the 34.4% surge in new postings from December to January surpassed the 27.9% gain recorded during the same period the year prior.
While employers usually ramp up hiring at the year's onset, the Bank of England is closely monitoring the labor market as it determines the timing for any interest rate cuts. The central bank has signaled concerns over projected slowdowns in hiring, which could play a role in dampening long-term inflation pressures.
Financial analysts suggest the increase stems from the government’s recent decision to boost social security contributions for employers starting this April. Observers have warned this might stifle hiring flow or even lead to redundancies. Nevertheless, last week's official data unexpectedly highlighted stronger hiring patterns as the year progressed.
The job postings reported by the REC represent double the 759,000 vacancies documented by the UK's Office for National Statistics for January. The official figures also showed a 1.3% uptick from the three-year low recorded in December. Kate Shoesmith, Deputy Chief Executive of REC, noted, "While there are tough conversations going on in boardrooms across the country, today's report suggests it is too soon for gloom about the UK economy's prospects overall for 2025." This sentiment reflects broader optimism about potential recovery trajectories.
The UK economy itself grew by 0.1% during the fourth quarter of 2024, bouncing back from zero growth noted previously. Following the end of 2023, which saw the economy fall under recession, the first half of 2024 showed notable growth at rates of 0.8% for Q1 and 0.4% for Q2. Even with this recovery, growth significantly eased during the latter half of the year.
Since the Labour Party's election victory in 2024, public approval ratings have declined sharply, plummeting to -54% by February 2025. This decline casts shadows on their governance following several unpopular policy decisions aimed at addressing the economic chasm which has persisted for years. Plans are underway to restore public trust, with economic improvement at the forefront of their objectives.
While the overall labor market demonstrated resilience through 2023 and 2024, the unemployment rate at the end of 2024 was reported at 4.4%, incrementally rising from 4% at the start of the year—still among the lowest on record. Job vacancy numbers have decreased from their peak observed back in May 2022, yet there was notable improvement with January 2025 marking slight recovery from previous declines.
Specifically, the government faces growing concern related to economic inactivity, predominantly attributed to long-term sickness, which peaked at 2.84 million individuals by late 2023. The tension surrounding these figures highlights the challenges confronting policymakers as they strive to stimulate economic engagement and reduce the burden of long-standing health-related workplace exits.
Looking forward, experts suggest this mixture of labor market resilience paired with economic growth, albeit limited, presents opportunities for gradual recovery. With anticipated increases across various sectors and the central bank's vigilance on inflation, future months will be telling of the direction the UK economy will attempt to pursue.
Kate Shoesmith succinctly proclaimed, "We will look closely in the coming months to see if we are looking at a broader turn." This statement perhaps encapsulates the cautious optimism felt across business circles and the citizenry alike as England traverses through economic uncertainties.