London’s job market is falling well below its pre-pandemic levels as the capital continues to adjust to the effects of hybrid working, new data shows.
Job adverts across London are tracking 19 per cent lower than in February 2020, according to Indeed, well below the national average. In the rest of the UK, job adverts are five per cent below pre-pandemic levels.
“The persistence of hybrid work and the slowdown in many professional services sectors continue to be factors weighing on employment demand in the capital,” the report noted.
The number of job advertisements in the accounting sector decreased by 18 percent compared to January 2020, while the legal sector was 28 percent lower.
The worst affected sector in London was software development, where job postings were down 49 percent in January 2020.
The figures reinforce data released by KPMG and the REC in January, which showed that the number of job vacancies in London fell for the 10th consecutive month in December.
Indeed’s figures showed that employees continued to value flexible working, with almost 16 per cent of job adverts across the UK mentioning the potential for remote or hybrid working.
Looking at the country as a whole, Indeed’s data shows UK job adverts are below pre-pandemic levels, a sign that the labor market is continuing to loosen up – albeit slowly.
Normally, January sees a jump in hiring as demand recovers. This year, however, there was only a 0.2 percent increase in postings, the weakest January increase in six years.
“The question in 2024 is whether the labor market stabilizes or retreats further,” commented Jack Kennedy, senior economist at Indeed UK.
“The Bank of England hopes that the continued fall in vacancies will mean that wage growth slows from current high levels, paving the way for interest rate cuts later this year.”
Interest rate setters at the bank pay attention to developments in the labor market to get indications of how its interest rate increases affect the economy. The bank is particularly concerned that higher wage growth could keep inflation above the two percent target in the medium term.
Revised figures from the Official for National Statistics (ONS) released earlier this week showed unemployment at 3.9 per cent, lower than previously expected. A tight labor market enables high wage growth.