Small businesses post fewer job vacancies in first quarter of 2024

Small business job vacancies down by 20,000 in first 3 months of 2024

UK small businesses with 1-9 employees had 20,000 fewer job vacancies at the end of March 2024 than at the end of December 2023, according to the latest release from the Intuit QuickBooks Small Business Index. In total, these businesses currently have 124,000 open positions, compared to 144,000 in December: a quarterly decline of 14.93%. Year-over-year, the decline is larger, with 40,000 fewer small business job vacancies in March 2024 compared to March 2023: an annual decline of 27.78%.

Jump to: Sectors | Regions | Analysis by Professor Ufuk Akcigit

Lower appetite for hiring

These trends are broadly in line with the latest labour market report from the Office for National Statistics. In the latest quarter for which data is available (ending February 2024) job vacancies fell by 43,000 across small, medium and large businesses in the UK — the 20th consecutive quarterly decline. At 3.9%, unemployment was higher in the quarter ending January 2024 (again, the latest data available), than in the same quarter a year earlier. 

Rising unemployment suggests the decline in vacancies is due to lower appetites for hiring among UK businesses rather than open positions being filled by job-hungry workers. There are now 1.5 unemployed people for every job vacancy, according to the latest data from the ONS — up from 1.4 in the previous quarter. In response, the UK government has recently announced a new apprenticeship scheme and measures to reclassify 132,000 businesses in the UK as small businesses to reduce regulation.

One sector increased hiring, others pulled back

Small businesses in the administrative and support services sector (SIC N) posted 100 more job vacancies from December 2023 to March 2024 than in the previous quarter, an increase of 7.68% to 2,000 vacancies. Over the 12 months from March 2023, vacancies were up by 200, an annual increase of 12.84%. This was the only sector in the UK with job vacancy growth at small businesses over both timeframes. Similarly, in its latest report, the ONS reports both quarterly and annual job vacancy growth for the administrative and support services sector (including small, medium and large businesses), up by 7.7% and 21.2% respectively.

The other 12 sectors tracked by the Index all posted fewer vacancies in Q1/2024 on a quarterly (vs December 2023) and annual basis (vs March 2023) — see table below. All data insights from the Index are seasonally adjusted.

Sectors with largest declines in job vacancies

• The wholesale and retail sector (SIC G) had the largest quarterly decline, with 2,500 fewer job vacancies posted by small businesses in Q1/2024 (-13.92%). Annually, the decline was larger: down by 4,200 to 16,800 in March 2024 vs March 2023 (-22.14%). The decline may be explained in part by national retail sales falling 0.4% in February 2024 compared to the previous quarter, according to data from the ONS. 

• The professional services sector (SIC M) was close behind wholesale and retail, with 2,300 fewer job vacancies in Q1/2024 (-14.73%). Annually, the decline was the largest of all sectors, at 6,200, leaving 14,800 job vacancies (-34.57%). The ONS shows a smaller quarterly decline for the sector, of 2.7%, suggesting job vacancies are not falling as fast at larger businesses.  

The arts, entertainment, and recreation sector (SIC R) had the fastest rate of decline in Q1/2024, at -21.04%, with 1,200 fewer small business job vacancies at the end of March 2024 than at the end of December 2023. This reflects the overall picture for the sector according to the ONS, with vacancies down by 19.8% across small, medium and large businesses compared to the previous quarter. Annually, according to the Index, the rate of decline was 18.48%, leaving small businesses with 4,700 job vacancies.

Job vacancies down in all four UK nations and every region of England

Small business job vacancies declined in all regions and nations of the UK in Q1/2024 on both a quarterly and annual basis, according to the Index. Across England as a whole, small businesses currently have 110,000 job vacancies. This is 17,900 fewer than the previous quarter and 35,600 fewer than a year earlier. 

• The North West of England had the fastest quarterly and annual declines in Q1/2024 — ahead of every other region of England as well as Scotland, Wales and Northern Ireland. Vacancies were 17.75% lower at the end of March 2024 compared to the end of December 2023 (down by 2,400) and 30.56% lower compared to March 2023 (down by 4,400). Current job vacancies: 12,300.

• The neigbouring North East region, on the other hand, had the slowest quarterly and annual declines in small business job vacancies both regionally and nationally in Q1/2024. Vacancies were 11.83% lower in March 2024 vs December 2023 (down by 500) and by 24.72% vs March 2023 (down by 1,100). Current job vacancies: 3,800.

Of the four UK nations, Northern Ireland had the slowest quarterly rate of decline in Q1/2024, down by​ 13.51%, with 300 fewer job vacancies in March 2024 compared to December 2023. Current job vacancies: 1,900. Wales was close behind, with a decline of 14.02%, with 700 fewer vacancies, finishing the quarter with 4,400 in total.

Expert analysis

Ufuk Akcigit, the Arnold C. Harberger Professor of Economics at the University of Chicago, explores the trends in more detail.

“2023 proved a challenging year for the UK economy, marked by various factors including the Ukraine conflict, supply chain disruptions, and lingering effects of COVID-19, resulting in high inflation and weak economic performance. 

“This struggle continues into the present. The ONS highlighted the economy's underwhelming performance, with GDP growth registering at -0.1% in Q3 and -0.3% in Q4, indicative of a technical recession defined by two consecutive quarters of negative growth. Labor market conditions have also been unfavorable, as indicated by the latest ONS announcement reporting a stagnant overall month-to-month job creation rate of 0.0% in January and 0.1% in February. Additionally, vacancy numbers saw a notable decline, dropping by 43,000 to 908,000 from December to February for small, medium, and large businesses. In terms of monetary policy, the Bank of England maintained the interest rate at 5.25% to combat inflation, which remains at 3.4%. 

“The majority of the UK economy, more than 95%, comprises businesses with fewer than nine workers. How have they fared amid these economic conditions? According to the Intuit QuickBooks Small Business Index, small business job vacancy numbers continued to decline in Q1/2024, experiencing a quarterly rate decrease of 14.93%, corresponding to a yearly growth decrease of 27.78%. This decline has persisted since Q2 of 2022, reflecting overall macroeconomic health. Notably, the arts and entertainment sector witnessed the most significant decline in vacancies, with a decrease of 21.04%, aligning with the ONS statistics noted above, which reported a sharp 19.8% decline in vacancies for all business sizes in this sector. Conversely, administrative and support services was the sole sector in the Index showing positive vacancy growth in Q1/2024, at 7.68% for the quarter. Vacancy declines were evident across all regions in the UK, with North West England experiencing the largest quarterly decline in Q1/2024, at 17.75%, and North East England showing the smallest decline, at 11.83%. During challenging macroeconomic conditions, all businesses, especially small ones, bear the brunt of the impact.

“Q1/2024 serves as another illustration of small businesses' increased susceptibility to broader economic conditions. The adverse figures in the Index concerning small business vacancies should hardly be surprising, given the prevailing weak demand and persistently unfavorable financial conditions. Moreover, inflation compounds the pressure on small business costs, exacerbating the situation further. The future of the UK economy appears uncertain, posing higher risks for small businesses. But there could be a silver lining for small businesses here: as vacancies decrease, reduced labor market tightness could facilitate small businesses' ability to compete for talent and potentially accelerate growth in the sector.”

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