Unemployment holds at 4.9% but vacancies slide as the labour market cools
Pay growth slowed to 3.5 per cent and vacancies fell to 702,000, while payroll and survey data told increasingly different stories about jobs.
The unemployment rate stood at 4.9 per cent in the three months to July, but the details of the latest labour market release suggest an economy in which hiring is stalling even as outright joblessness stays contained.
Vacancies fell to 702,000 in June to August, continuing a long slide from the record highs of the post-pandemic hiring boom. Regular earnings growth, excluding bonuses, slowed to 3.5 per cent, barely ahead of inflation at 3.1 per cent.
One of the more striking features of the current data is the divergence between the two main measures of employment. Payroll data from HMRC and the Labour Force Survey have been telling increasingly different stories, a reminder that the headline numbers come with unusual uncertainty attached.
The House of Commons Library’s briefing on the figures notes the softening in hiring alongside pay growth that, while still positive in real terms, is losing momentum.
For the Bank of England, the labour market is the other half of the rates puzzle. Cooling vacancies and slowing pay growth argue for patience; persistent services inflation argues for caution. The September minutes showed the committee split 6-3 on exactly that judgment.
For the Government, the figures land a month before the Chancellor’s first Budget. A labour market that is cooling without collapsing gives John Healey room to argue that discipline is working, but little room to claim that growth has arrived.
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