“It’s the economy, stupid.”

And in that moment, the paradigm by which political discourse became viewed changed. Now with a new Labour Government in situ, the signs are for the most redistributive budget to be seen in many generations. In fact, given the fact New Labour mostly signed up to the tenets of the prior Conservative regime, you would have to go back to pre-Thatcher to understand how this Government seeks to govern. With that, other than the much publicized up-coming budget, the most striking elements of this Government’s policy so far are:

• Massive pay rises across the public sector, from doctors to train drivers, unlike anything seen in decades.
• Nationalisation is starting already, with power and utilities the primary focus. Just last week plans were announced to take hold of the UK’s energy system.
• The changes to employment law are already causing consternation, with research by the Institute of Directors showing 57% of business leaders will be less likely to hire new workers due to the proposed changes in legislation.
• Finally, a real attempt to get on top of housing, with a strategic partnership announced between the Government, Barratt and Lloyds so to enable the construction of affordable housing.

Hence when analysing the ONS data sheet, insofar that vacancies are falling, what is also striking is the one industry to see an uplift over the last 12 months is Real Estate & Construction. Across all other areas, activity has dropped over the last year. Interestingly this ties into a report recently published by us in partnership with Macdonald & Co, where their survey findings show that confidence is returning to the property industry.

You can read on here for more.

https://vacancysoft.com/london-uk-real-estate-labour-market-trends-summer-2024/

Looking at other elements of the ONS report, what is striking is that despite the downward trend, underlying activity is now returning to the levels seen before the pandemic period, which is suggesting that the job market is now hitting equilibrium, and like anything, there will be areas that are winning, and others that lose. With that, the numbers of people unemployed per vacancy is also dropping.

Meanwhile, over the summer, we have been publishing a series of reports analysing the UK economy by industry, and our findings have been that:

• The Banking sector is picking up, as is the Legal Sector
• Insurance is also in rude health, with Lloyds of London recording massive profits in the first half of this year
• VC Funding is picking up and Fintech in particular has been benefiting, equally the Technology industry is clearly improving on last year
• Life Sciences has also had a pick up in the last 3 months after a slow post pandemic period

Obviously the distinction is, that for the markets we profile, they tend to be for the top half of the job market, where businesses retain high levels of demand for their services both nationally and internationally and skill shortages are endemic, whereas the ONS report analyses all areas.

Equally consistently the area we have seen that has been struggling this past year has been retail. As an industry this has been hit hard by the combination of:

• The tourist tax – meaning people coming from the USA, China or the Gulf do their shopping in Paris, not London
• Energy costs rising, in part due to the Ukraine war – The UK is a net importer of energy over winter, and the Ukraine war has squeezed continental capacity. Even now, energy costs are set to rise further this winter.
• Inflation, Interest rates and the cost of living crisis – The combination of rising inflation and interest rates is relatively unprecedented in the modern era, and has meant disposable incomes being squeezed and consumption slowing.

Given Retail and Consumer Goods & Services accounts for approximately 20% of employment in the private sector in the UK, downward pressure here directly translates onto the economy, so it is not until we start to see an uplift in this industry, that the underlying vacancy levels are likely to rise.

For recruiters currently focused on retail and e-commerce, the priority therefore needs to be pivoting away, as there is no real sign of when the current prevailing economic winds will change. But to where? Maybe we can help analyse that question with you.