UK pay growth cools, unemployment rate falls to six-month low

10th Sep 2024 08:11

(Sharecast News) - UK pay growth cooled in the three months to July, while the unemployment rate fell to a six-month low, according to figures released on Tuesday by the Office for National Statistics.

The unemployment rate declined to 4.1% from 4.2% in the previous three months, in line with economists' expectations.

Meanwhile, growth in average earnings fell to 5.1%, hitting a two-year low. Annual growth including bonuses was 4%.

The data also showed that in June to August, the estimated number of vacancies fell by 42,000 on the quarter to 857,000. This marked the 26th consecutive quarterly decline but still left vacancies above pre-Covid levels.

Meanwhile, estimates for payrolled employees were down 6,000 between June and July, but rose by 203,000 on an annual basis.

Liz McKeown, director of economic statistics at the ONS, said: "Growth in total pay has slowed markedly again as one-off payments made to many public sector workers in June and July last year continue to affect the figures.

"Basic pay growth also continued to slow, though less sharply.

"When taken together on a comparable basis, our different measures all show growth in the number of employees over the latest quarter, though annual growth has slowed over the year.

"Meanwhile, there was a decrease in the number of self-employed people and a fall in both those looking for a job and not looking for or available to start working."

Ashley Webb, UK economist at Capital Economics, said: "Overall, while the continued easing in wage growth will be pleasing to the Bank, we doubt today's release will move the needle too much for September's policy meeting. We still think the Bank will pause in September before implementing another 25bps rate cut in November."

Peter Arnold, EY UK chief economist, said: "On balance, today's release offered little in the way of new developments, and the EY ITEM Club expects the MPC to take a similar view. Pay growth is gradually slowing from very high rates, while labour market conditions are looser than they were last year but still relatively tight by historical standards.

"The EY ITEM Club sees no obvious reason why the MPC would deviate from the path of gradual rate cuts they implied last month, so the EY ITEM Club expects next week's meeting to result in a vote to keep Bank Rate at 5%."