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The number of job vacancies and payrolled employees in the UK have continued to fall, according to the Office for National Statistics (ONS), adding to evidence of a cooling labour market.

Data released on Tuesday showed that the number of job vacancies in the UK fell by 44,000 in the three months to July. The ONS said that this marked the 37th consecutive period where vacancy numbers have dropped compared with the previous three months and that vacancies had fallen in 16 of the 18 industry sectors.

The ONS said feedback from its vacancy survey suggested some firms may not be recruiting new workers, or replacing workers who have left.

The number of employees on the payroll in June was down by 26,000 on the month, which was more than a decline of 25,000 in May, but was smaller than a previously estimated fall of 41,000.

Estimates for payrolled employees in the year to June fell by 149,000. Early estimates for the number of employees on the payroll in July fell by 8,000 on the month and 164,000 on the year.

The unemployment rate was 4.7% from April to June, unchanged from the previous three months.

Annual wage growth excluding bonuses was at 5% in April to June, which was also the same as the previous three months.

Employers have faced higher labour costs after the rate of their national insurance contributions and the national minimum wage rose in early April, which were changes announced by chancellor Rachel Reeves in the autumn budget.

Liz McKeown, director of economic statistics at the ONS, said: "Taken together, these latest figures point to continued cooling of the labour market."

"The number of employees on payroll has now fallen in 10 of the last twelve months, with these falls concentrated in hospitality and retail."

"Job vacancies, likewise, have continued to fall, also driven by fewer opportunities in these industries," she added."

Labour market data is closely watched by the Bank of England (BoE), as it tries to balance keeping inflation under control, while also avoiding a slowdown in the labour market. The BoE cut interest rates last week to 4% from 4.25%, marking its fifth cut in a year.

Ashley Webb, UK economist at Capital Economics, said: "The further falls in payroll employment and job vacancies together with slowing wage growth suggests the labour market is still cooling, albeit at a slower pace."

He said that the "loosening in the labour market should continue to bear down on wage growth further ahead".

"Indeed, we think it’s only a matter of time before wage growth slows to rates consistent with the 2% inflation target," Webb added. "So for now we still think the Bank will cut interest rates once more this year in November, from 4.00% now to 3.75%."

Professor Joe Nellis, economic adviser at accountancy and advisory firm MHA (MHA.L), said: "The continued fall in job vacancies shows that this tougher environment for jobseekers reflects a downturn in recruitment activity, rather than mass redundancies. Following a dramatic rise as the economy opened up after lockdown, the number of job vacancies has been decreasing back to the pre-pandemic norm since April 2022."

He said that for the BoE a "softer labour market could be welcome news — high wage growth accompanied by stagnant productivity has been a strong inflationary driver. Slowing earnings growth is easing upwards pressure on inflation and giving the monetary policy committee more room to consider rate cuts later this year."

However, Nellis added that this "this is not good news for the chancellor. A weaker job market adds another layer of complexity to the upcoming autumn budget as lower employment may lead to reduced tax revenues at a time of high public spending."

"While inflation remains below earnings growth at 3.6%, it has incrementally risen for the past year and is expected to reach 4% later this year, eroding the gap between earnings growth and inflation," he said. "If these trends continue real wages may come under serious pressure, heightening the adversity faced by both ordinary people and the beleaguered chancellor."