UK Job Vacancies Plummet, Stoking Recession Fears
17 Jul 2023
17 Jul 2023 by Luke Puplett - Founder
London - Job vacancies in the UK have fallen sharply in recent months, fueling concerns that the country may be headed for a recession.
According to recruitment firm Reed, job postings dropped 24.4% in the three months to June compared to last year. The decline was even steeper compared to pre-pandemic levels in 2019, falling 26.6%.
The hardest hit areas appear to be former industrial towns in northern England and coastal communities. Locations like Gateshead, Southend-on-Sea and Sunderland have seen job opportunities dry up rapidly over the past year. This poses a challenge for the government's "leveling up" agenda aimed at revitalizing neglected regions.
Falling vacancies often foreshadow economic contraction. According to Bloomberg Economics analysis, a decline on the scale detected by Reed has historically been associated with a 0.6% GDP decline in the same quarter.
However, it remains unclear whether this relationship still holds in the wake of the pandemic's impact on the labor market. And a single quarter of GDP decline does not guarantee a technical recession, which requires two consecutive quarters of shrinking output.
Nonetheless, the plunging number of openings is concerning and could spell trouble for the ruling Conservative government ahead of general elections expected next year. Recruitment executives like Reed chairman James Reed have grown more pessimistic about the economic outlook as vacancies evaporate.
The path forward remains uncertain. But the evaporating job openings are the latest sign that the post-pandemic recovery may be losing steam, even as the Bank of England battles soaring inflation. Economists will be monitoring the situation closely for any hints of a downturn on the horizon.
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