UK job vacancies have fallen to a four-year low, and pay growth remains steady, official data showed. The unemployment rate held at 4.9% in the three months to July, while job vacancies dropped to 702,000 in the three months to August. The Bank of England is expected to hold interest rates steady at its upcoming meeting.
The persistent weakness in the UK jobs market, particularly the fall in vacancies, suggests a cooling labor demand that could support the Bank of England's decision to hold interest rates steady. This could influence the trajectory of inflation and consumer spending.
The UK labor market showed signs of continued weakness as job vacancies dropped to a four-year low and pay growth held steady, according to official data. The unemployment rate remained at 4.9% for the three months ending in July, while job vacancies decreased to 702,000 for the three months ending in August. This data comes ahead of the Bank of England's upcoming interest rate decision.
Bank of England agents reported that employment intentions remain broadly flat, with recruitment difficulties below normal levels. The average pay settlement for 2026 has ticked up slightly to 3.6%, a change primarily reflecting new information on April settlements rather than later deals. Contacts do not expect to review pay again until 2027, with settlements for that year anticipated to be similar to or slightly lower than 2026.
Separately, UK GDP grew 0.4% in July, a stronger-than-expected figure that followed a 0.3% rise in June. This economic data point complicates the Bank of England's decision, though economists widely expect the Monetary Policy Committee to hold the Bank Rate at 3.75% on September 17. Overnight-index-swap pricing indicated an 80% probability of a hold and a 20% chance of a quarter-point increase as of September 9.