Business put hiring on hold due to cost pressures

18 June 2026

The number of job vacancies in the March to May period fell to 707,000, the lowest level since February to April 2021, according to the latest data from the Office for National Statistics (ONS).

Professional services saw the largest fall in vacancies, but retail and hospitality also saw significant drops. The number of people starting new jobs fell to its lowest level in five years, as the number of vacancies continued to fall.

Unemployment fell slightly to 4.9% in the three months to April, from 5% in the three months to March, while new hires were just under 540,000, in April, the lowest monthly figure since March 2021. 

Milnes, Head of Policy for People and Work at the British Chambers of Commerce, said: “While unemployment fell slightly to 4.9 per cent, the expectation is that it will rise as businesses remain cautious about hiring. Our latest forecast suggests it could reach 5.2 per cent by Christmas as firms struggle with labour cost pressures.

“With vacancies falling and a rise in economic inactivity, this would suggest many businesses are pressing pause on recruitment as uncertainty looms around costs, global headwinds and domestic policies.

“Although earnings growth has eased it remains above inflation and overall cost pressures on firms remain significant.

“While unemployment for 18–24-year-olds dropped slightly to 14.5%, there are growing concerns about the outlook for young people. We expect youth unemployment to reach 17% this year, before topping out at 17.8% in 2027. 

“In part, this will be down to structural changes in the labour market, as AI starts making it harder for young people to find work. 

“Government must act to support business confidence and unlock hiring by tackling cost pressures on firms and ensuring young people have the skills businesses need.”

More detail on the labour market data can be found here.