The UK’s jobs market, which has been buoyant since the economy began to recover from the pandemic, might be starting to turn, experts have warned.

Although the unemployment rate fell to 3.6% in the three months to July – the lowest since 1974 – the employment rate and number of vacancies also fell.

Rises in regular pay are also failing to keep up with rising living costs.

“The jobs boom that began six months after the pandemic is probably coming to an end now,” said the boss of Reed.

Speaking to the BBC’s Today programme, James Reed, who chairs the recruitment business, said: “There are still very large numbers of vacancies and people are still advertising a lot of jobs, and that’s why we’ve seen unemployment continue to go down.

Lagging

“The question is, what happens next? Will there be a jobs slump?

“That’s a concern clearly but our data at the moment doesn’t suggest that, because we’ve still got a large number of vacancies and a lot of employers are still struggling to recruit.”

One reason for the fall in the unemployment rate is a rise in the number of people who are no longer looking for work, and so not counted in the figure.

The inactivity rate rose to 21.7%, the Office for National Statistics (ONS) said, the highest since 2017.

The squeeze on pay also remains, with rises in regular pay lagging behind inflation.

When taking the rise in prices into account, the value of regular pay fell by 2.8%, the ONS said.

Inflation – a measure of price rises – is currently 9/9% - down from a 40-year high of 10.1% the previous month.

The continued gap between private and public sector pay growth was also visible from the ONS’s figures.

Average regular pay growth for the private sector was 6% in May to July, compared with 2% for the public sector.

According to the ONS, that is the largest ever difference between private and public sector, outside of the height of the pandemic period.

Despite the jobless rate falling to its lowest rate for 48 years, other measures suggested that the jobs market might be beginning to turn.

The number of job vacancies fell by the most in two years, down 34,000 between June and August, although the overall number of vacancies still remains historically high.

The employment rate also slipped to 75.4%, a small drop from the previous three-month period.

The EY Item Club said the fall in the unemployment rate masked some job market weakness.

“The decline in joblessness disguised what was only a modest 40,000 rise in employment, the smallest since January to March, with a rise in inactivity playing a bigger role in pushing unemployment down,” said Martin Beck, chief economic adviser to the EY Item Club.

“Moreover, the single-month data showed the number in work in July falling on three months earlier to the greatest extent since January 2021.

“This suggests that the weak economy is starting to have an adverse effect on the jobs market.”