UK Labour Market Shows Signs of Cooling
The UK's jobs market has weakened significantly, with new official data revealing that the unemployment rate has climbed to its highest point since the Covid-19 pandemic. The Office for National Statistics (ONS) reported that the unemployment rate increased to 5% for the quarter covering July to September. This is the highest level recorded since February 2021, marking a concerning shift in the country's economic landscape.
Payrolls Shrink and Wage Growth Cools
In a further blow, the ONS estimates show a consistent decline in the number of employees on company payrolls. The data indicates a fall of 32,000 in September, followed by another drop of 32,000 in October, bringing the total number of payrolled employees down to 30.3 million. As the jobs market cools, the pace of wage growth has also begun to slow. Annual growth in average earnings for employees slipped to 4.6% in the latest quarter, down from the 4.7% recorded in the three months to August.
Economic Concerns and Future Implications
Liz McKeown, ONS Director of Economic Statistics, stated, "Taken together these figures point to a weakening labour market. The number of people on payroll is falling, with revised tax data now showing falls in most of the last 12 months. Meanwhile the unemployment rate is up in the latest quarter to a post pandemic high." She also noted that while wage growth slowed in the private sector, public sector pay growth remained stronger due to some pay rises being awarded earlier than last year. This jump in UK unemployment and the slowdown in wage growth will heighten concerns about the UK economy cooling. The data could influence Chancellor Rachel Reeves ahead of her budget on 26 November and may spur the Bank of England to consider cutting interest rates as soon as December.
