22nd July 2026
The number of job vacancies in the UK has been falling quite sharply, and it is one of the clearest signs that the labour market is cooling after the extraordinary shortages seen after the pandemic.
Falling vacancies do not automatically mean the economy is in recession. They mean employers are becoming more cautious about hiring.
The jobs market is changing
During 2021 and 2022, businesses struggled to recruit.
There were shortages across many sectors:
hospitality;
transport;
construction;
healthcare;
engineering;
agriculture.
Employers were competing strongly for workers, pushing wages higher.
That period was unusual.
Now the picture has changed.
The number of UK vacancies has fallen substantially from the peaks seen after the pandemic. The latest ONS figures show vacancies at around 700,000, the lowest level for several years and significantly below the levels seen in 2022.
What does falling vacancies mean?
A vacancy is a sign that an employer wants to expand or replace workers.
When vacancies fall, it usually means one of three things:
Businesses are less confident
Companies may be thinking:
"We can manage with fewer staff."
"Let's delay recruitment."
"Let's wait and see what happens."
This is often the first sign of caution before unemployment rises.
Higher costs are affecting decisions
Businesses have faced increases in:
wages;
energy bills;
taxation;
borrowing costs;
raw material costs.
For some firms, especially smaller businesses, taking on another employee is a major financial commitment.
The labour market is returning to normal
There is also a more positive interpretation.
The huge vacancy levels after Covid were unusual.
Some of the fall simply represents a return to a more normal balance between employers looking for workers and people seeking jobs.
Why unemployment has not risen dramatically
The interesting part is that falling vacancies have not yet translated into mass unemployment.
The unemployment rate has remained relatively stable, while employment levels remain high.
This suggests businesses are currently adjusting mainly by:
not recruiting;
reducing overtime;
delaying expansion;
leaving positions unfilled.
They are not necessarily making large numbers of redundancies.
That is quite different from a traditional recession.
The warning sign for the economy
The danger is if falling vacancies continue.
The normal pattern is:
Economy slows → businesses stop hiring → vacancies fall → unemployment eventually rises
Vacancies are therefore sometimes called a leading indicator because they can weaken before unemployment figures show a problem.
The Bank of England watches this closely because a cooling jobs market can reduce wage pressure and inflation.
Why this matters in Scotland and Caithness
The national figures can hide local differences.
In areas like Caithness, the issue has often been the opposite:
not enough workers rather than too many people seeking jobs.
Local employers have struggled with recruitment because of:
population ageing;
young people leaving;
housing shortages;
distance from major labour markets;
specialist skill shortages.
A fall in national vacancies does not necessarily solve those problems.
A care home, engineering company, hospitality business or construction firm in the Highlands may still find it difficult to recruit even when the national labour market is weakening.
What does it say about the economy?
My interpretation would be:
The UK economy is not collapsing, but it is losing momentum.
The signs point towards:
weaker business confidence;
slower hiring;
slower wage growth;
more cautious employers.
The good news is that inflation is easing.
The concern is whether the economy can move from simply avoiding trouble into a period of stronger growth.
A question for Andy Burnham's government
This creates a difficult challenge.
A government trying to raise living standards needs:
businesses willing to invest;
employers creating jobs;
productivity improvements;
wage growth.
But businesses are less likely to hire if they feel costs are rising and demand is uncertain.
The challenge is not just creating jobs.
It is creating productive, well-paid jobs.