Key Facts
• On July 14, a report by REC and KPMG revealed a sharp slowdown in the UK labor market in June.
• The job seeker index rose from 63.3 in May to 66.1, the highest since November 2020.
• Such high levels were previously seen only during the pandemic, the 2008-09 financial crisis, and post-9/11.
• REC and KPMG attribute the rise to heightened uncertainty rather than a sudden economic downturn.
• KPMG CEO John Holt cited geopolitical instability, rising costs, and technology-driven efficiency as reasons for hiring caution.
• Initial salaries for new hires and job demand softened, signaling a labor market slowdown.
• The Bank of England is widely expected to lower policy interest rates in its upcoming meeting.
Summary
The UK labor market experienced a significant slowdown in June, with job seekers increasing at the fastest rate since the pandemic, according to a report by REC and KPMG. The job seeker index climbed to 66.1, a level last seen in November 2020, and previously only during major crises like the 2008-09 financial crash and post-9/11. While the rise reflects heightened uncertainty, it does not indicate a sudden economic downturn. KPMG CEO John Holt highlighted factors such as geopolitical instability, rising costs, and technological advancements as reasons for companies delaying hiring decisions. Additionally, initial salaries for new hires and job demand weakened, further underscoring the labor market’s deceleration. The Bank of England is expected to respond by lowering interest rates in its next meeting.
