As we close out the first half of 2024, positive indications are starting to appear. The latest UK GDP figures released by the Office for National Statistics (ONS) revealed that the UK economy grew by 0.6% in Q1, which is welcome news following the “technical” recession of the latter part of 2023 when the UK posted two consecutive quarters of negative growth (consecutive declines of 0.1% and 0.3% in Q3 and Q4 2023, respectively). This latest uptick was the highest level of growth seen in the past three years, since the 1.5% recorded in Q1 of 2021.
So, how bullish should we be about the UK’s prospects in 2024, and can we talk about a recovery? Our data has shown that while the number of jobs continues to fall — down by 1% month on month in April and 17% year on year — the rate of decrease has been slowing. This indicates confidence is increasing as organizations seek to reactivate their hiring plans, especially for permanent vacancies. Falling inflation and the consequent rise in real wages will also help to stimulate economic growth.
Of concern is the drop in applications, which fell by 34% month on month and were down 26% year on year in April. This can be attributed to several reasons but primarily that jobseekers are cautious and opting to remain in their current jobs, which is understandable given the prevailing economic uncertainty and the ongoing cost of living crisis. However, jobseeker inertia makes it harder for organizations to combat skill shortages, particularly in the STEM, healthcare and education sectors.
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Hiring Challenges Amid Waning Applications
We see a mixed picture, with some sectors faring better than others. Among the hardest hit was logistics and supply chain, with vacancies down by just 1% month on month in April but by a far more sizeable 47% year on year. This is unsurprising, given the energy crisis and the many disruptions faced as a result of ongoing widespread global conflict, which is wreaking havoc with the transportation of oil and raw materials. Telecoms is another of the most impacted sectors, recording a 62% fall month on month, with vacancies dropping 31% year on year.
Among the better performers are education and training; vacancies here are 9% higher month on month and 22% for the year in April. It should be noted that applications did fall by 41% for the month, although there was a slight decrease of 1% over the year. This will not help a sector that is already struggling to attract talent and is losing employees looking for jobs that will increase their take-home income to help ease the cost-of-living expenses. Accountancy vacancies were also up in April by 2% month on month, although the 18% year on year fall does put things into perspective.
While vacancies are still falling, the economic uptick in Q1 bodes well, which is reflected in the lower rate of decrease in the number of jobs, which are higher than pre-pandemic levels. Application numbers are a concern, especially in sectors such as healthcare, where shortages are rife and where there is an urgent need for skilled professionals.
I am optimistic that the GDP uplift seen in Q1, which beat the Bank of England’s forecast of 0.4%, will continue as conditions improve. The expectation is that the Bank will cut interest rates, which currently remain unaltered at a 16-year high of 5.25%, should inflation remain low. The combination of the two will fuel consumer spending and investment, driving GDP and job growth.