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A recent report from the Office for National Statistics (ONS) revealed that wage growth in the UK experienced a slight dip during the summer months, coinciding with a marginal increase in unemployment. In the three months leading up to August, average wage growth stood at 4.7%, a decrease from the 4.8% recorded in the previous quarter. The national unemployment rate also saw a slight uptick from 4.7% to 4.8%, suggesting a stabilization in the UK job market following a period of uncertainty.
The data further indicated a decrease in job vacancies by 9,000, or 1.3%, in the three months leading up to September. This marked the 39th consecutive period where job openings had declined compared to the previous three months. Liz McKeown, the ONS’s director of economic statistics, noted that after a prolonged period of subdued hiring activity, there were signs of a leveling off in payroll numbers and vacancies. She also highlighted a rise in unemployment among younger individuals.
While private sector earnings growth hit a four-year low, it still outpaced inflation. Workers’ average earnings saw an annual growth of 6% in the public sector and 4.4% in the private sector. Economists like Ashley Webb from Capital Economics suggested that the strong wage growth might delay potential interest rate cuts by the Bank of England. However, they anticipated a gradual decline in wage growth due to market conditions, which could allow for rate cuts in the future.
According to the ONS, industries like wholesaling, retailing, hotels, and restaurants exhibited the strongest regular annual growth rates. Additionally, the data showed an increase in the number of redundancies between June and August compared to the previous year. Real wage growth, accounting for inflation, currently stands at 0.9%, a figure criticized by the Liberal Democrats and the Resolution Foundation as insufficient. The Resolution Foundation described the real wage growth as “paltry,” with real weekly wages only seeing a small increase since the previous year. They expressed concerns that the combination of a weakening labor market and high inflation could lead to increased cost of living pressures in the coming months
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