Key facts
- UK wage growth, including bonuses, was 4.1% in April-June, exceeding the 4% forecast.
- Public sector pay growth stood at 5.5%, significantly higher than the private sector's 2.9%.
- The unemployment rate held steady at 4.9%.
- Job vacancies fell to their lowest level in over five years.
- The Bank of England anticipates unemployment to rise to 5.2% later in the year.
Official statistics revealed that UK wage growth, including bonuses, reached 4.1% between April and June, exceeding the market forecast of 4%. This figure was lower than the previous month's 4.3%. Excluding bonuses, pay growth was 3.5%, also slightly above expectations. The higher-than-anticipated wage growth was largely driven by the public sector, which saw average earnings increase by 5.5%, in contrast to the private sector's 2.9%. Liz McKeown, director of economic statistics at the ONS, noted that private sector pay growth is easing while public sector growth remains elevated due to recent NHS pay awards. The unemployment rate remained steady at 4.9%. The number of payrolled employees saw a modest increase of 3,000 but is still down by approximately 85,000 compared to a year ago. Job vacancies decreased by 6,000 to 707,000, marking a five-year low, with smaller businesses citing labor and operating costs as reasons for reduced hiring. Looking ahead, the Bank of England projects the unemployment rate to climb to 5.2% later this year, with some forecasts suggesting a peak closer to 5.5%. Slower wage growth and rising unemployment could potentially alleviate concerns about further interest rate hikes by the Bank of England in response to energy price shocks stemming from Middle East trade disruptions. In political developments, the Conservative Party is challenging the Labour government over job losses, proposing to repeal EU regulations to ease employment for young people. This includes removing mandatory rest periods for 16 and 17-year-olds and allowing them to work later hours on weekends and any hour outside of term time, drawing on findings from the Alan Milburn review on young people not in employment, education, or training.