New research from job site Adzuna suggests that competition for roles in the UK has reached its highest level in three years. With more than two jobseekers for every vacancy, things are getting tight. In August 2024, the number of advertised jobs fell by 0.5% to 857,000, marking a slight decline from July. It’s a sign that the UK job market may be hitting a wall – or at least slowing down.

What’s Behind the Stagnation?

The job market can be a bit like a barometer for the broader economy. When companies are hiring, it’s usually a good indicator that things are going well. But when listings start to dry up, it can be a warning sign of tougher times ahead.

So, what’s causing this stall? There are a few factors at play:

1. Redundancies are Rising: More people are losing their jobs, which naturally means more competition for the ones that are still available.
2. Long-Term Sickness: Unfortunately, long-term health issues continue to sideline a portion of the workforce, adding to the strain. This means fewer people are available to work, but at the same time, fewer vacancies are being created as employers grow cautious about hiring.
3. Slower Hiring Processes: Employers seem to be hitting the brakes on recruitment. Adzuna reports that the average time it takes to fill a vacancy has increased to 35 days. That’s a significant jump, suggesting that companies might be taking a wait-and-see approach, hoping for clearer economic signals before making big hiring decisions.

It’s not all bad news, though. While vacancies have dropped and competition has increased, the average advertised salary is up slightly, hitting £38,800 – around 3% higher than this time last year. It’s a small silver lining, though one that’s overshadowed by the fact that wage growth still isn’t keeping up with inflation. So, while the numbers look better on paper, many workers are feeling the pinch in their pockets.

Is There a Silver Lining?

While the broader job market might be stalling, there are some bright spots. Graduate roles, for example, have been on the rise for the past four months. That’s good news if you’re a recent graduate or someone looking to switch into a new field. It’s a sign that some parts of the labour market are still growing, even if overall momentum has slowed.

Andrew Hunter, co-founder of Adzuna, pointed out that July saw a bit of a boost in vacancies, but this positive trend fizzled out in August as redundancies climbed and the number of jobseekers rose. This paints a picture of a labour market that’s stuck in a bit of a holding pattern, with companies focusing on specific hires and holding off on more widespread recruitment until they get a clearer view of where the economy is headed.

Tony Wilson, director at the Institute for Employment Studies, acknowledged that these trends may feel disappointing for anyone who was hoping for a stronger summer recovery in the job market. Still, he noted that vacancies seem to be stabilising at around 850,000, and the increased competition for roles suggests that things are starting to resemble pre-pandemic levels again.

What Does This Mean for Jobseekers?

If you’re currently looking for a job, you’re probably noticing a couple of things: more people going for the same roles and a longer wait to hear back. So, how can you navigate these choppy waters?

1. Focus on Quality Over Quantity: It’s tempting to fire off as many applications as possible, but with employers being more selective, tailoring your CV and cover letter to each role is more crucial than ever.
2. Be Patient: With hiring processes taking longer, it’s important to manage expectations. Keep following up on applications, but be prepared for delays.
3. Look for Niche Opportunities: Graduate roles are on the rise, so if you’re a recent graduate or have some flexibility in your career path, you might want to explore these areas.

Employers Are Taking a Cautious Approach

If you’re on the other side of the fence as an employer, this could be a good time to find top talent – provided you’re willing to be patient. With a growing pool of applicants, there’s more choice, but it’s taking longer to find the right match. Employers are understandably cautious right now. They don’t want to overcommit when the economic outlook is still uncertain.

Yet, Tony Wilson’s comment that these trends might give the Bank of England more confidence for future interest rate cuts could hint at better days ahead. If borrowing becomes cheaper, it might spur companies to invest more, potentially opening up the job market again.

What’s Next?

It’s clear that the UK job market is at a bit of a crossroads. The numbers don’t suggest a full-blown downturn, but they’re not showing robust growth either. We might be in for a period of what experts call “stagnation,” where things neither improve significantly nor deteriorate sharply. That said, if inflation continues to drop and interest rates are adjusted, we could see a bit more life breathed into the market.

For now, though, job seekers should be prepared for a bit more competition and a longer search. And employers? Well, they might be in a position to be more selective than they’ve been in a while. Let’s hope we see more job listings come back onto the market as the year progresses. Until then, keep an eye on those graduate roles – they might just be the first sign of a wider recovery.