Nepal UK
LONDON — Official data suggests a cooling in Britain's labour market, a development that could reduce pressure on the Bank of England regarding persistent inflation. Recent figures show a seventh consecutive monthly drop in payrolled employees and a slight dip in overall wage growth.
The Office for National Statistics (ONS) reported a provisional decrease of 8,000 workers on company payrolls in August, with a revised decline of 6,000 in July. Many employers have attributed their cautious hiring approach to a recent tax increase initiated by Finance Minister Rachel Reeves, with concerns of further tax hikes in her upcoming budget also weighing on business decisions. Yael Selfin, a chief economist, noted that businesses may be delaying recruitment until there is more clarity on future tax policies.
The report also showed a slowdown in private sector basic wage growth, a key metric monitored by the Bank of England, from 4.8% to 4.7% between May and July. While average weekly earnings still grew by 4.8%, economists believe this rate remains too high to be consistent with the central bank’s 2% inflation target. Analysts like Ashley Webb of Capital Economics noted that the data may not be enough to fully allay the Bank of England's concerns.
However, the report did offer some positive signs for the labour market. The number of job vacancies rose to 728,000 in the three months to August, the first increase since early last year, suggesting that the recent trend of staffing cuts might be coming to an end. Sanjay Raja, a chief UK economist, commented that this could provide some comfort, indicating a less volatile path ahead for the labour market.
The overall unemployment rate for the three months to July remained at 4.7%, its highest since 2021, although the ONS has cautioned about the reliability of this particular survey.
