UK unemployment rate falls unexpectedly, wage growth slows

13th Aug 2024 07:14

(Sharecast News) - The UK unemployment rate fell unexpectedly in June, according to figures on Tuesday by the Office for National Statistics.

The unemployment rate declined to 4.2% from 4.4% in May, coming in below expectations for a reading of 4.5%.

The data also showed that growth in average earnings excluding bonuses fell to 5.4% from 5.8% in May and versus expectations of 4.6%. This marked the slowest pace of growth since May to July 2022.

Including bonuses, average earnings grew 4.5% in June, down from 5.7% and below expectations of 4.6%.

ONS director of economic statistics Liz McKeown said: "There was a fall in the unemployment rate, which is now lower than a year ago. Meanwhile, there was a modest increase in both the total numbers of people in employment and the number of employees on payroll in the latest quarter.

"However, the medium-term picture remains somewhat subdued with the employment rate still lower than a year ago and the growth rate in the number of payrolled employees having slowed over the year.

"The number of job vacancies continues to decline, although the total number remains above pre-pandemic levels."

Ruth Gregory, deputy chief UK economist at Capital Economics, said: "The further easing in wage growth will be welcomed by the Bank of England as a sign that labour market conditions are continuing to cool. This lends some support to our forecast that the Bank of England will press ahead with two more 25bps interest rate cuts later this year."