Key facts
- UK average total earnings growth slowed to 4.1% in the three months to June.
- This figure is lower than the 4.3% recorded in the previous period.
- Pay growth excluding bonuses increased slightly to 3.5%.
- The unemployment rate held steady at 4.9%.
- Annual earnings growth adjusted for inflation stood at 1.3%.
UK wage growth experienced a slowdown in June, with average total earnings increasing by 4.1% in the three months to June, a decrease from 4.3% in the previous period and below the 4% forecast by economists. This softening is observed despite a broadly stable overall jobs market, with regular wage growth remaining consistent. However, private sector pay growth has eased, while public sector pay, particularly for the NHS, remains elevated.
Pay growth excluding bonuses saw a slight increase to 3.5%. The number of employees on payrolls declined by 13,000 in July, a smaller reduction than in preceding months, while job vacancies also fell. Small businesses have indicated rising employment costs. The headline unemployment rate remained unchanged at 4.9%, contrary to economists' expectations of a drop to 4.8%.
These figures emerge as households brace for a further squeeze on living standards, partly due to the economic repercussions of the conflict in the Middle East. Upcoming data is anticipated to show UK inflation nearing 3% in July, driven by increased energy bills. Annual earnings growth adjusted for inflation was 1.3% in the three months to June, raising concerns about a potential squeeze if inflation continues to rise while wage growth slows.
The government, under its new prime minister, has introduced measures to alleviate the cost of living and is awaiting a review on youth employment. The number of young people (16-24) not in education, employment, or training has exceeded one million for the first time in over a decade. Ministers are also considering recommendations for identifying at-risk youth and enhancing internship opportunities for those with special educational needs.