UK small business job market slows as employment declines
Intuit’s September 2024 Small Business Index has revealed a slowdown in the UK job market, based on data from 25,000 small businesses with one to nine employees. The report shows a decline of around 1,400 jobs and fewer vacancies across the sector, indicating a cooling labour market.
Job vacancies in UK small businesses dropped by 0.08%, with 100 fewer openings, while employment fell by 0.03%, amounting to approximately 1,400 lost jobs. Over the past year, the UK small business sector has seen a net reduction of 10,000 jobs. This slowdown aligns with a broader decline in the UK labour market, where wage growth has hit its lowest level in over two years. According to the ONS UK Labour Market Overview for October 2024, job vacancies across the UK fell sharply between July and September.
The QuickBooks Small Business Index reported that all sectors either shed jobs or remained stagnant, with manufacturing, accommodation and food services, and education experiencing the sharpest declines. The drop in job vacancies reflects a cautious hiring approach as businesses face uncertainty surrounding potential policy changes from the newly elected Labour government ahead of the Autumn budget.
Regionally, the North East of England experienced the steepest decline, losing 300 jobs, while the West Midlands bucked the trend with a slight increase in both employment (200 jobs) and job vacancies (100 openings).
This slowdown comes as speculation grows that the Bank of England may cut interest rates in November. Wage growth has slowed to 4.9%, the lowest since 2022, which strengthens expectations that the Bank will reduce rates to 4.75%. While a rate cut could ease pressure on businesses facing high borrowing costs, uncertainty remains high across the market.
Simon Worsfold, Head of Data Communications at Intuit said: “The latest ONS Labour Market figures and our Small Business Index reflect a delicate period for small businesses, with marginal declines and stagnation in employment highlighting the cautious outlook many have as they await the results of the upcoming budget. The mixed performance across regions and sectors underscores the need for targeted policies that stimulate growth, while addressing the broader economic challenges facing the UK.”
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