UK jobs market weakens as payrolls and wage growth slow
Britain’s labor market continued to lose momentum, with official data showing employment falling for a seventh consecutive month and wage growth slowing. The trend may ease pressure on the Bank of England over inflation concerns.
Provisional figures showed company payrolls fell by 8,000 in August compared to July, extending declines that began in February. July’s drop was revised to 6,000, less than the previously reported 8,000. Employers blamed Chancellor Rachel Reeves’ recent tax hike for their cautious approach to hiring.
Private sector wage growth, a key metric for the BoE, slowed to 4.7% in the May–July period from 4.8% in the prior three months. Overall average weekly earnings, excluding bonuses, rose 4.8%, down from 5.0%, but still above the 3% level considered consistent with the BoE’s 2% inflation target. Economists had largely expected growth to ease to 4.8%.
There were, however, some signs of resilience. Job vacancies in the three months to August increased to 728,000, after hitting their lowest level since early 2021 in the previous month.
The Bank of England cut interest rates last month to 4% from 4.25%, but is expected to hold steady this week while it monitors inflation risks. Unemployment in the three months to July remained at 4.7%, the highest since mid-2021, though the ONS noted reliability issues in its household survey data.
Recent surveys also showed pay settlements fell to their lowest level in over three years in July, while hiring slowed—though at a milder pace than earlier this year.
