Labour Market Outlook | Mixed picture emerges as new hires slump to 5-year low despite surprise fall in unemployment

The UK labour market delivered another contradictory set of signals this month, with unemployment unexpectedly falling but hiring activity continuing to weaken.

The latest Office for National Statistics figures show the unemployment rate fell from 5.0% to 4.9% in the three months to April, defying expectations of a further increase. Wage growth also proved more resilient than forecast, with regular pay growth holding at 3.4% and total pay growth increasing to 4.4%. 

However, vacancies fell by a further 19,000 to 707,000, their lowest level since early 2021, while payroll employment continued to decline. Most notably, the ONS reported that the number of people starting new jobs has fallen to its lowest level in five years, underlining employers' continued reluctance to recruit.

Signs of resilience emerge

Lee Chant, Managing Director, Commercial Staffing at ManpowerGroup UK, said the latest figures reveal a labour market caught between caution and recovery.