Wage growth across Great Britain has slowed, as companies cut the number of workers on their payrolls.
Data just released by the Office for National Statistics shows that regular pay (excluding bonuses) rose by 4.9% in June-August, down from 5.1% recorded in May-July.
Total earnings (including bonuses), rose by 3.8% in the quarter, again slower than the 4.0% recorded a month ago. This growth rate is affected by the one-off bonus payments made to NHS and civil service staff in June, July and August 2023, the ONS points out.
The unemployment rate has fallen to its lowest since the start of this year, today’s labour force report shows.
The jobless rate has dipped to 4% in the June to August quarter, its lowest since the three months to January.
The number of people unemployed dropped to 1.386m, a fall of 141,000 in the quarter.
In contrast, the employment rate rose over the quarter, to 75%, up from 74.8% last month.
The economic inactivity rate (those neither working nor looking for work), slowed to 21.8% from 21.9%.
Companies are continuing to cut their vacancies – a sign that demand for labour is weakening, or of economic uncertainty.
Today’s jobs report shows that vacancies in the UK decreased by 34,000 in July to September, to 841,000.
Several economists are predicting that today’s slowdown in pay growth will encourage the Bank of England to cut interest rates at its next meeting in early November.
Following the news that regular wage growth across Great Britain slowed to 4.9% in June to August, down from 5.1% a month ago, Ashley Webb, the UK economist at Capital Economics, says: "The further fall in wage growth in August, together with some signs that the labour market continued to loosen gradually, adds further support to widespread expectations that the Bank of England will cut interest rates from 5.00% to 4.75% at the next policy meeting in November."
Luke Bartholomew, the deputy chief economist at Abrdn, says that “for now, another interest rate cut in November looks nailed on”, explaining:“The labour market report is unlikely to move the dial much on interest rate expectations. Wage growth continues to gradually moderate, but still needs to come down further to be fully consistent with the Bank of England’s target."
A cut in November was already seen as an 83% chance. This morning, it’s inched up towards 85%.
The agenda
• 7am BST: UK labour market report
• 10am BST: ZEW economic sentiment index for Germany
• 10am IEA monthly oil Market Report
• 1.30pm NY Empire State manufacturing Index
• 2pm BST: IMF begins publishing analytical chapters of its Global Financial Stability Report
• 2.30pm BST: World Bank to release report on poverty and prosperity
We’ll be tracking all the main events throughout the day ...
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