The Office for National Statistics has confirmed that the United Kingdom’s unemployment rate has dropped to 4.9%. The figure for February to April showed a decrease from 5% in the previous three months, with the number of individuals aged 16 and above without work decreasing to 1.76 million. Despite an increase in the number of people claiming out-of-work benefits in May, the overall decline in unemployment was positive.
Job vacancies in the country continued to decrease, with a drop of 19,000 to 707,000, the lowest level since April 2021. The decline in job openings was most notable in lower-paying sectors and smaller businesses, with the professional services sector experiencing the largest decrease in vacancies during the quarter.
Average wage growth remained stable at 3.4% between February and April, or 4.4% including bonuses. This steady growth means that for the typical worker, wages are rising in line with or slightly above inflation. Private sector wage growth slowed from 3.1% to 2.9%, while public sector workers saw a more significant increase of 5.1%, influenced by the timing of pay adjustments this year.
The latest data on the UK labor market was released as voters participated in the Makerfield byelection. The Bank of England’s Monetary Policy Committee is set to vote on changing the base rate from 3.75%, with most economists predicting it will remain unchanged.
According to Liz McKeown, director of economic statistics at the ONS, the labor market showed stability in the latest quarter, with some softening in certain indicators. Vacancies continued to decline, indicating a cautious approach among firms towards hiring new employees.
Louise Murphy, a senior economist at the Resolution Foundation, highlighted that the UK labor market is currently weaker than in previous years, with an increase in irregular work arrangements, higher youth unemployment, and lower wage growth affecting private sector workers.
Thomas Pugh, chief economist at RSM UK, predicted a gradual increase in the unemployment rate in the coming months due to factors like rising input costs and lower hiring confidence. He anticipates a peak rate of 5.3% and stagnant real wages despite lower oil prices.
Patrick Milnes, head of policy for people and work at the British Chambers of Commerce, expressed concern over rising unemployment rates and falling vacancies, attributing these trends to businesses’ cautious hiring practices amid cost pressures and economic uncertainties.
TUC General Secretary Paul Nowak cautioned that despite some improvements in the job market earlier in the year, the current figures indicate challenging times ahead, with falling vacancies and stagnant wages posing risks to both jobs and living standards.
