There were fresh signs today that a major jobs downturn could be looming this year, in an “urgent warning” to a Government on track for a historic collapse and a Chancellor at risk of losing his seat.
This morning, professional services recruiter PageGroup became the third recruiter to warn of a hiring slowdown in the space of a week. It says full-year profits will be below guidance, and down about 40% from last year.
CEO Nicholas Kirk said: “Activity levels are not all converting into gross profit due to ongoing lower levels of candidate and client confidence.”
PageGroup’s warning comes just days after similarly bleak results from two of its rivals. Robert Walters said fee income tumbled by 19% in the UK, with London hit hardest, while Hays saw its fees in the UK fall by 17%, with a 21% decline in the capital.
Neil Shah, director at Edison Group, said: “The global hiring market has slowed down considerably as we’ve entered 2024, with high interest rates and general macroeconomic uncertainty making themselves felt.”
The profit warning also comes in the wake of figures that show London’s labour market is slowing at the fastest pace since the height of the Covid-19 pandemic. The KPMG and REC London labour-market pulse check, supported by BusinessLDN, showed a sharp decline in the number of vacancies in London.
Muniya Barua, deputy CEO of BusinessLDN, told the Standard that the figures sent a clear message to Jeremy Hunt: “The stalling London job market is sending an urgent warning to the Chancellor that he needs to go for growth in his Spring Budget.
“With the economy flatlining, bringing back VAT-free shopping on goods for international visitors would provide an immediate boost. He should also take bolder action to make childcare more affordable and accessible so that parents and carers can return to work in greater numbers.”
Meanwhile, BDO’s employment index shows that hiring intentions hit a new decade low in the last quarter of the year.
A surge in the jobless rate could come at the worst time for the Government, ahead of an autumn election. Top Tories hope falling inflation will help restore voters’ trust in Rishi Sunak and Jeremy Hunt on the economy, but mass job losses could ruin those plans.
Polls suggest the Conservative Party is on course for a historic wipeout. According to a YouGov projection released last night, Hunt is on course to lose his seat as the Tories face the biggest collapse for a governing party in 118 years.
Economists have warned that a weaker labour market is an inevitable consequence of the Bank of England’s efforts to bring inflation back under control.
The ONS will publish the latest official labour market statistics tomorrow. The unemployment rate remains low by historic standards at 4.2%, but the most recent readings suggest a drastic decline in pay growth, which had been near record highs, is on the way. Slowing pay growth is often a leading indicator for wider weakness in the job market.
Kate Shoesmith, deputy CEO of the Recruitment & Employment Confederation, said: “The labour market weakened across 2023, especially for permanent roles. But it did so from a very high base.
“It is important to remember that activity levels overall remain relatively high by comparison to pre-pandemic norms, and unemployment is low. There was always going to be an end to the labour market ‘sugar rush’ that ensued as we came out of lockdowns – but there remains opportunity out there for jobseekers, especially in growing sectors.”
