Pay growth overtakes inflation but vacancy numbers fall back

  • Average pay including bonuses up 8.5% in the three months to July – the highest since comparable records began
  • Vacancy numbers fall back under one million for the first time in over two years
  • Unemployment ticked up to 4.3%

Danni Hewson, head of financial analysis at AJ Bell, comments on the latest UK jobs figures: 

“It’s a big moment. Wages have been shooting up as a tight labour market pushed employers to dig deep to help their workers deal with cost of living pressures, but this is the first time in almost two years people will actually feel the benefit. 

“Until now inflation has gobbled up all that additional cash leaving people feeling worse off and struggling to pay everyday bills. 

 
 

“Now inflation has cooled enough that those increases will start to make a small difference but with fears that inflation may have another nasty surprise in store and additional pressures from interest rate rises, some households might be forgiven for feeling increasingly weary with the whole shebang. 

“What these figures will also do is continue to exert pressure on the Bank of England’s monetary policy committee which has to reach agreement about the best way to protect the UK economy when it meets next week.

“There’s every indication that interest rates will rise for the fifteenth time, but then what? 

 
 

“High borrowing costs and fears of an economic slowdown are impacting businesses, making them think twice about investing for the future until the present seems more stable.

“Vacancy numbers have fallen for the fourteenth time in a row and are back under the one million mark for the first time in over two years.

“It’s a milestone, but historically vacancy numbers are still high. Indeed, Wilko workers are finding themselves being wooed by numerous suitors looking for hardworking staff to join their teams. 

 
 

“There may be trouble ahead – unemployment has ticked up, the number of self-employment jobs has experienced a record quarterly fall, and we’ve seen another record high in long term sickness levels.

“The labour market has been resilient but there are signs that the stress of the last couple of years has created a few cracks. The fear is that any more pressure might mean those cracks start to crumble.”

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