SME job vacancies falling since Feb amid inflation struggles
In the UK in May, small businesses with one to nine employees had 4,400 fewer job vacancies compared to the previous official benchmark of 154,000 in April’s Vacancy Survey, published by the Office for National Statistics. That’s a monthly decrease of -2.90% to 149,600 job vacancies — doubling April’s reported decrease of -1.42%.
Small business job vacancies fell in 75% of sectors. Sectors with the largest decreases were:
- Transport and storage (SIC H) — such as taxi companies and railway support services — with a drop of -6.19% to 9,600 job vacancies
- Construction (SIC F) — including roofing companies and demolition services — with a drop of -4.91% to 900 job vacancies
- Accommodation and food services (SIC I) — including hotels and hostels, catering services, and pubs — with a drop of -4.01% to 9,700 job vacancies
But in three sectors, small business job vacancies went up. Sectors with increases were:
- Arts, entertainment, and recreation (SIC R) — such as museums and art galleries and fitness facilities — with an increase of 2.63% to 5,700 job vacancies
- Health care and social work (SIC Q) — including nursing homes and dental offices — with an increase of 1.25% to 10,500 job vacancies
- Finance and insurance (SIC K) — including wealth management firms — with and increase of 0.81% to 7,200 job vacancies
England had the largest decrease in the UK, with a drop of -3.12% to 132,500 small business job vacancies.
Scotland was the only region that experienced an increase in small business job vacancies, with an uptick of 1.01% to 9,600 vacancies.
“Persistent inflationary pressure has led the market to anticipate further interest rate hikes, creating increasingly challenging conditions, particularly for small businesses…These prevailing trends are evident in the vacancy numbers of small businesses in the UK. ”
Ufuk Akcigit, the Arnold C. Harberger professor of economics at the University of Chicago, said: “The UK government is currently facing a growing sense of urgency in their efforts to control inflation. Despite the Bank of England (BoE) raising the policy rate more than 10 times over the past 18 months, inflation in the UK remains higher compared to the United States, Canada, and the Eurozone as a whole. This persistent inflationary pressure has led the market to anticipate further interest rate hikes, creating increasingly challenging conditions, particularly for small businesses. Notably, when asked about the greatest challenges they are currently confronting, small business owners consistently cite “inflation” as a top concern on their list.
“These prevailing trends are evident in the job vacancy numbers of small businesses in the UK, as reflected in the Intuit QuickBooks Small Business Index. This Index specifically tracks the job vacancy numbers of small businesses employing at most nine workers. According to the Index, there was a decline in vacancy numbers last month, with a further decrease of -2.90% recorded this month.
“The changes in job vacancy numbers have exhibited regional heterogeneity. Across the UK, England experienced the most significant decline, with a decrease of -3.12%. Conversely, Scotland stands out as the only nation to witness a modest increase in job vacancy numbers, with a rise of 1.01%.
“A similar pattern emerges when considering different sectors. The “transport and storage” sector in the UK recorded the largest decline in job vacancy numbers, experiencing a decrease of -6.19%. In contrast, the “Arts, entertainment, and recreation” sector saw the highest increase in job vacancy creation, with a rise of 2.63%. These findings illustrate the complex dynamics within the UK small business job market, with some regions and sectors being impacted more than others.
“Small and young businesses are crucial for the future of the UK economy, yet they also are extremely vulnerable to macroeconomic conditions. This is why it is important to closely monitor the economic well-being of these businesses with the Intuit QuickBooks Small Business Index, as doing so not only provides timely insights into the current state of the economy but also serves as an early indicator of what may lie ahead. By keeping a watchful eye on their health, we can gain a deeper understanding of the prevailing economic climate and anticipate future developments with greater accuracy.”
