Pay Growth Slows and Vacancies Hit Five-Year Low
Official figures showed the UK labour market cooling, with pay growth slowing to 3.5 per cent and job vacancies falling to 707,000, their lowest in five years. Unemployment held at 4.9 per cent for April to June, up on the year, while the number of payrolled employees fell over the past 12 months. Smaller firms in particular were reported to be scaling back hiring.
A softening jobs market is a double-edged signal: weaker pay growth and fewer vacancies squeeze households, but they also cool the inflation the Bank of England has been fighting, strengthening the case for interest-rate cuts that would ease mortgage costs. The slide in vacancies to a five-year low, and the fall in payrolled employees, suggest employers turned cautious under the weight of higher costs and uncertain demand — a backdrop that shadows the Chancellor’s autumn budget, where softer growth means less room to manoeuvre. Wage growth at 3.5 per cent still outpaces inflation, so real pay is rising, for now. Watch how the Bank reads the data at its next meeting and whether the cooling deepens.