The UK’s jobless rate unexpectedly held steady in the second quarter amid a marginal decline in job vacancies and continued easing in private sector pay growth, according to data from the Office for National Statistics published Tuesday.
The unemployment rate for people aged 16 years and over came in at 4.9% in the three months to June, unchanged from the three months to May. Analysts expected an unemployment rate of 4.8% for the period.
Meanwhile, the UK employment rate for people aged 16 years and over was 60.7% during the quarter to June. For people aged 16 to 64 years, the employment rate stood at 75.1%
“The labour market picture is little changed overall, with some softening still evident. Employment, unemployment and inactivity rates have all remained steady, while the number of employees on payroll fell slightly in the latest quarter,” ONS Director of Economic Statistics Liz McKeown said. “Vacancies remain broadly flat, though a small fall in the latest period puts them at the lowest level in more than five years. The latest decrease was driven mainly by smaller businesses, which cite labour and operating costs as reasons for not hiring new staff or replacing leavers.”
Employees’ average regular earnings growth, excluding bonuses, came in at 3.5% year over year in the quarter to June, compared with the previous and expected 3.4%, while total earnings, including bonuses, rose 4.1%, after the revised 4.4% jump previously.
In the public sector, the annual average growth in regular pay stood at 6.1%, higher than 5.5% in the previous three-month period, while regular earnings growth in the private sector edged down to 2.8% from 2.9%.
“Limited pay increases in the private sector coupled with increased staff productivity supports our call that domestically generated price pressures will continue to ease,” Berenberg said in a UK labor market-focused note.
“While higher energy prices will keep headline CPI inflation at around 3% for the rest of the year, above the [Bank of England’s] 2% target, slowing services price inflation will likely drag it below 2% in the second half of 2027, once the upward pressure from energy prices drops out of the equation. We expect the BoE to resume interest rate cuts in December and lower its policy rate to 3.00% next summer, in order to prevent a protracted inflation undershoot,” the research firm added.
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