The Office for National Statistics has officially confirmed a decrease in the UK’s unemployment rate to 4.9%. The rate dropped from 5% in the previous quarter, with the number of unemployed individuals aged 16 and above declining to 1.76 million. Despite a rise in people claiming out-of-work benefits in May, the overall trend showed improvement.
Job vacancies in the country continued to decrease, with a notable drop of 19,000 to 707,000, the lowest level since April 2021. The decline in job openings was particularly noticeable in lower-paying sectors and smaller companies, with the professional services sector experiencing the largest decrease.
Average wage growth held steady at 3.4% between February and April, or 4.4% when factoring in bonuses. This maintained a trend where wages for the average worker were increasing in line with or slightly above inflation. While private sector wage growth slowed to 2.9% from 3.1%, public sector workers saw a larger increase at 5.1%, influenced by the timing of pay adjustments this year.
The UK’s labor market displayed a mixed outlook as voters participated in the Makerfield by-election. The Bank of England’s Monetary Policy Committee was set to decide on the base rate, with most experts predicting it would remain unchanged.
According to Liz McKeown, director of economic statistics at the ONS, the labor market remained relatively stable, although there were signs of softening in certain indicators. Vacancies continued to decline, indicating a cautious approach among firms in hiring new employees.
Louise Murphy, a senior economist at the Resolution Foundation, pointed out weaknesses in the UK labor market, including increased irregular work patterns, higher youth unemployment, and subdued wage growth, especially in the private sector.
Thomas Pugh, chief economist at RSM UK, predicted a gradual increase in the unemployment rate due to various economic factors, expecting it to peak at 5.3%. Real wages were anticipated to stagnate in the latter part of the year despite lower oil prices.
The British Chambers of Commerce expressed concerns about rising unemployment, attributing it to businesses’ cautious recruitment strategies amid cost pressures and economic uncertainties.
TUC General Secretary Paul Nowak highlighted the challenges ahead for workers and businesses, noting that declining job vacancies and stagnant real wages posed risks to employment and living standards.