According to the latest official figures, the UK’s unemployment rate has decreased slightly, standing at 4.2% in the three months leading up to the end of June—a marginal decline from 4.4% in the previous quarter.
Despite the positive shift, wage growth has continued to slow, increasing at an annual rate of 5.4%—the weakest rise in nearly two years. Despite some positive news, the Office for National Statistics (ONS) has highlighted signs that the job market may be cooling. Job vacancies have risen, redundancies are increasing, and the number of people not actively seeking work remains stubbornly high.
The ONS also noted that businesses are facing higher operating costs, which may lead to reduced hiring. However, the ONS cautioned against emphasising its current employment figures too much, as the Labour Force Survey generates this data and has experienced a lower-than-usual number of respondents over the past year.
These developments could influence the Bank of England’s future decisions on interest rates. In a closely contested decision, the Bank recently cut the interest rate to 5% from 5.25%—the first reduction in over four years. High interest rates have been used to curb inflation, but they have also driven up consumer borrowing costs and possibly contributed to the slowdown in wage growth.
The ONS reported that estimated vacancies in the UK fell by 26,000 to 884,000 in the three months to July.
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