Vacancies dropped in 14 out of 18 industry sectors tracked by the ONS. The number of payrolled employees also dropped by an early estimate of 9,000 in the three months to February, bringing the total drop over a year to around 87,000. The estimate for March suggested there was a further drop of 65,000 in the first sign of the impact the Iran war has had on firms.

The unemployment rate fell, however, to 4.9 per cent from a previous figure of 5.2 per cent. The ONS suggested this came alongside the number of people not actively seeking work increasing as fewer students appeared to looking for work outside of their studies. “Vacancies fell to their lowest level in almost five years, but with unemployment also falling the number of vacancies per unemployed person remains broadly unchanged,” Liz McKeown, directo of economic statistics at the ONS, said.

Jonathan Raymond, investment manager at Quilter Cheviot, said March estimates showed there was little chance of a “swift recovery” taking place in the jobs market. “Given today’s data does not capture the initial impact of the conflict in the Middle East, we can expect the labour market to soften even more from here on out.,” Raymond said. “Businesses have had hiring plans largely on hold since before the budget, and many will have swiftly put the brakes on again at the outbreak of the war.” The ONS also revealed that wage growth was higher than expected in February, presenting a dilemma for Bank of England rate-setters.

The statistics body said, including bonuses, wage growth was 3.8 per cent while it was 3.6 per cent when bonuses were excluded from figures. City economists had pencilled in wage growth of 3.5 per cent excluding bonuses and 3.6 per cent including them. Jobs market to hold back inflation surge The latest set of data came as economists calculated the effects the Iran war would have on the wider jobs market.

The latest Item Club report forecast unemployment to peak at 5.8 per cent, hitting the highest level in 12 years. It would leave hundreds of thousands of people without a job. However, a weaker jobs market and slowing wage growth could stop prices from spiralling as they did after Russia’s full-scale invasion of Ukraine and subsequent energy price shock.

“Although price inflation is set to accelerate, workers may struggle to push for higher wages in the face of company resistance, although worker groups with greater bargaining power may be able to push through higher claims,” said the economist Peter Dixon. City analysts have widely suggested that inflation is unlikely to jump over five per cent as a result of the Iran war. Later on Tuesday, Chancellor Rachel Reeves is set to deliver a speech emphasising that she would not be pushed into “knee jerk reactions” and would instead deliver policies focused on securing long-term security in defence and energy. She is also expected to re-iterate the need for de-escalation in the war in the Middle East given the ceasefire between the US and Iran has been shaky.