Wage rates in the UK have slowed and the job market has cooled due to rising inflation.
The latest figures by the Office for National Statistics (ONS) show that unemployment remained the same and wage growth is slowing.
The rate of UK unemployment remained at 4.7 per cent in the three months to June, compared with the three months to May.
Meanwhile real wage growth has slowed to just 1.1 per cent in the three months to June, down from 2.8 per cent in the prior three months to March 2025.
On top of that, the number of people on payroll has one again fallen by over 8,000 in July alone.
Liz McKeown, director of economic statistics at the ONS, said: ‘Taken together, these latest figures point to a continued cooling of the labour market.
‘The number of employees on payroll has now fallen in 10 of the last 12 months, with these falls concentrated in hospitality and retail.
‘Job vacancies, likewise, have continued to fall, also driven by fewer opportunities in these industries.
‘Growth in basic pay stayed steady, while including bonuses the rate slowed a little, though nominal growth remains strong by historic standards.
‘However, real pay growth fell, due to rising inflation.’
The figures follow a recent unexpected rise in inflation.
The headline CPI rate had been expected to stay on hold at 3.4 per cent in the year to June, but instead increased to 3.6 per cent.
Commenting on the new ONS figures, Helen Whately MP, Shadow Secretary of State for Work and Pensions, said: ‘Unemployment is now up again for the tenth month in a row under Labour.
‘That means more families struggling to pay the bills and more people signing on for benefits
‘It is the sad but predictable outcome of Labour’s war on business – which has seen taxes hiked to record highs and employers strangled in reams of red tape.
‘With even more painful tax rises now inevitable in the autumn things are set to get worse before they get better. One thing is clear: Labour isn’t working.’
The fall in unemployment comes as the Government said it wanted to bring more people out of economic activity.
Last week, education minister Baroness Smith of Malvern told Times Radio: ‘I want to make sure … that we’re growing the economy, that we’ve got people in good jobs.
‘The economy is growing and we have seen an additional over 300,000 jobs since we came into Government.
‘And of course, as we’ve been talking about, in areas like construction we’ve got a very big plan that means that we need more skilled workers, which is why I’m making the announcement I’m making this morning.
‘What we also need to see is people coming out of that area of economic inactivity, and we are making some progress in that.
‘People who thought they were never going to be able to work, who are now actually out looking for jobs, and we need to make sure that the jobs are there for them, including skilled jobs in construction.’
This is a breaking news story: more to come.
