Responding to latest official labour market statistics, showing the unemployment rate rose to 3.9%, Tej Parikh, Chief Economist at the Institute of Directors, said:

“The jobs market remains a source of strength for the UK economy, though it may now be reaching its peak.

“High employment has proved a lifeline for the economy in a difficult period. With so many people in work, solid household incomes have kept consumer spending fairly buoyant while the production and construction sectors have waned.

“With investment in machinery and technology often deemed too risky right now, businesses have sought to bring on board more staff to help lift output. But as more workers have been snapped up, firms have found it harder to fill their openings. While competition has pushed up salaries, thin margins and low productivity may set a ceiling for pay growth. Although vacancies remain high by historic standards, the number has been dropping since the start of the year.

“Impressive jobs market data should not lull policymakers into a false sense of confidence. As it becomes harder to find talent, businesses will need better access to training courses and a flexible immigration system to meet their skill needs.”