UK labour market cools as wage growth eases and vacancies hit five-year low
UK labour market shows further cooling in Q2: private sector wage growth slows to 2.8%, vacancies drop to lowest since 2021, unemployment steady at 4.9%.
Britain's labour market showed further signs of cooling in the second quarter, with private sector wage growth slowing to its weakest pace in nearly four years and the number of job vacancies falling to a five-year low, according to official data released on Tuesday.
Private sector regular earnings, a key gauge for the Bank of England (BoE) of domestic inflation pressure, rose by 2.8% in annual terms in the three months to June. That was the slowest growth since the three months to October 2020 and matched the BoE's own forecast published last month.
The unemployment rate held steady at 4.9%, defying expectations in a poll of economists for a slight dip to 4.8%. The Office for National Statistics (ONS) also reported that the number of open job vacancies fell to 707,000 in the three months to July, down from 711,000 in the previous quarter. That is the smallest total since the three months to April 2021, and excluding the pandemic period, vacancies are at their lowest since late 2014.
"The labour market picture is little changed overall, with some softening still evident," said Liz McKeown, ONS Director of Economic Statistics.
Overall annual earnings growth, excluding bonuses, was 3.5% in the second quarter, slightly above the 3.4% that economists had mostly expected.
The BoE is closely monitoring whether the energy price jump caused by the Iran war is translating into longer-term inflation pressures. Financial markets on Monday priced in one 0.25 percentage-point interest rate hike by the end of 2026.