The Office for National Statistics has confirmed that the unemployment rate in the UK has decreased to 4.9%, down from 5% in the previous three months, with 1.76 million people aged 16 and over out of work. Despite a rise in people claiming out of work benefits in May, the overall trend is positive. Job vacancies saw a decrease of 19,000 to 707,000, the lowest level since April 2021, especially notable in lower-paying sectors and smaller companies, with professional services experiencing the largest decline.
Wage growth remained steady at 3.4% between February and April, or 4.4% including bonuses. While private sector wage growth slowed to 2.9%, public sector workers saw a robust increase of 5.1%, influenced by differing pay award timings this year. The UK labor market’s status is under scrutiny as voters participated in the Makerfield by-election, coinciding with the Bank of England’s Monetary Policy Committee’s decision on the base rate, expected to remain unchanged at 3.75%.
Liz McKeown, ONS director of economic statistics, noted a stable labor market with some softening indicators, such as falling payroll numbers and reduced vacancies, signaling caution among businesses in hiring new staff. Louise Murphy from the Resolution Foundation highlighted concerns over weaker labor market conditions, pointing to rising irregular work forms, youth unemployment, and declining wage growth for private sector workers.
Thomas Pugh, chief economist at RSM UK, anticipates a gradual increase in the unemployment rate to 5.3% due to rising input costs and uncertain hiring prospects. Additionally, wage growth in the 3% – 3.5% range suggests stagnant real wages in the latter part of the year. The British Chambers of Commerce and TUC representatives echoed concerns over rising unemployment and stagnating real wages, emphasizing the challenges ahead for workers and businesses.
