the economy is increasingly likely to experience an avalanche of job losses in the coming months John Philpott, Chief Economist at the Chartered In

The latest set of official labour market figures published last week by the Office for National Statistics (ONS) show the worst deterioration in the UK’s underlying job situation for at least a decade. John Philpott, Chief Economist at the Chartered Institute of Personnel and Development (CIPD), warns that the economy is increasingly likely to experience an avalanche of job losses in the coming months.

“With horribly bitter timing this extremely weak set of job figures – which we expected but hoped not to see - has arrived in one of the gloomiest weeks of economic news for a long-time.

“A significant drop in job vacancies and a sudden large jump in the vacancy rate underlies a fall in the number of people in work and surge in joblessness. There are not only more people unemployed and looking for jobs but also more economically inactive and outside the workforce. Most worrying of all, more of the jobless are suffering long-periods without work; a trend that looks set to worsen with the number of vacancies falling so sharply.

“But today’s bad jobs figures will not be the last. The official snapshot shows that the jobs situation worsened in the summer months”

A CIPD surveys of employers’ recruitment and redundancy intentions show that the demand for staff has weakened further into the autumn and will continue to do so as the economic downturn bites.

Monthly inflows to claimant unemployment – an important leading indicator of the state of the economy and jobs market – are rising sharply. And with business confidence diminishing almost by the day it is becoming clear that more and more employers are readying themselves for further job cuts. This according to CIPD is likely to propel the unemployment rate back over 2 million in 2009 and leave more than 1 million in the queue for Jobseekers Allowance.

Mr Philpott adds that:

“Despite all the doom and gloom in the City, today’s figures indicate that the jobs crunch in the summer months hit hardest in construction and shops, hotels and restaurants – parts of the private sector directly affected by the housing market slowdown and reduced consumer spending. The public sector, by contrast, registered a surprise increase in jobs, although the jobs outlook is at best flat for the public sector too.

“In a break with recent trends, middle-aged people and those up to state pension age appear to have borne the brunt of the fall in employment. This may signal that despite the introduction of age discrimination legislation older people might still be those more likely to accept voluntary redundancy or be hit by compulsory job cuts. “

The only bright spot, says Mr Philpott in last week’s labour market figures is that growth in average earnings is restrained and there is a squeeze on household incomes as a result of the recent big rise in the cost of living.