UK Unemployment Steady at 4.9% as Job Vacancies Decline

UK unemployment remained steady at 4.9% in the three months to June, according to the Office for National Statistics (ONS). However, payroll employment and job vacancies showed signs of decline, pointing to a weak labor market. Preliminary estimates from HM Revenue and Customs revealed that the number of payrolled employees fell by 94,000 year-on-year to 30.3 million in July. This marks a 0.3% decrease. Confirmed data for June showed a payroll drop of 78,000 compared to the previous year and a decrease of 13,000 from May.

Job Vacancies at Five-Year Low

Job vacancies fell to 707,000 during the May to July period. This is the lowest level outside the pandemic since late 2014. Smaller businesses cited rising labor and operating costs as reasons for cutting back on hiring. Suren Thiru, chief economist at the Institute of Chartered Accountants in England and Wales, noted that the labor market remains in a "low-churn limbo." Employers are hesitant to hire or raise wages due to economic pressures.

Pay Growth Trends

Regular pay growth edged up to 3.5% in the three months to June. Meanwhile, total earnings growth slowed to 4.1%. Public sector wages rose by 6.1%, but private sector growth lagged at 2.8%. Yael Selfin, chief economist at KPMG, highlighted that the pay increase was largely driven by public sector wages. This suggests a less favorable outlook for private sector conditions. After adjusting for inflation, regular pay increased by 0.5% using the CPIH measure and by 0.7% with the CPI measure. Analysts warn against drawing firm conclusions from these figures, as short-term changes may not reflect long-term trends.

Related coverage: UK Wage Growth Slows to 4.1% Amid Cost of Living Squeeze, U.S. Jobs Report Shows Modest Gains Amid Stagnant Wages.

Based on reporting by: proactiveinvestors.co.uk, bbc.co.uk