Unemployment rate rises slightly to 4.8% but ONS says falls in and payroll numbers and vacancies are levelling off
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Britain’s employment market has shown signs of stabilising after a sharp rise in job losses earlier this year blamed on tax rises introduced by Rachel Reeves.
As the chancellor prepares for her 26 November budget, figures from the Office for National Statistics showed the unemployment rate rose to 4.8% in the three months to August, up from 4.7% in July. City economists had forecast the rate to remain unchanged.
Separate figures from HMRC showed the number of workers on company payrolls dropped by 10,000 in September. However, the ONS said the slowdown in the jobs market was steadying after steeper declines earlier this year, which had been attributed to tax increases announced by Reeves last year and introduced in April.
“After a long period of weak hiring activity, there are signs that the falls we have seen in both payroll numbers and vacancies are now levelling off,” said Liz McKeown, the ONS director of economic statistics.
The number of workers on company payrolls in August was also revised from a decline of 8,000 to an increase of 10,000.
Annual growth in regular average weekly earnings, excluding bonuses, slowed slightly from 4.8% in the three months to July to 4.7% in the three months to August, matching City economists’ forecasts.
“Wage growth slowed in the private sector to its lowest rate in nearly four years, but public sector pay growth increased, reflecting some public sector pay rises being awarded earlier than they were last year,” McKeown said.
However, total pay growth unexpectedly rose from a revised level of 4.8% to 5%, highlighting resilience in earnings despite a cooling jobs market.
The ONS’s figures are based on its widely criticised labour force survey, which has suffered from collapsing response rates. Experts have argued this leaves policymakers “flying blind”, risking decisions being taken based on flawed data.
Reeves is widely expected to raise taxes in the budget. However, business leaders have warned a weaker growth outlook will make it harder for her to raise taxes without harming the economy.
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Strong wage growth has caused a headache for the Bank of England by stoking inflationary pressures, putting further interest rate cuts at risk after four reductions in the past year. However, a deeper slowdown in the jobs market could show the economy is deteriorating, supporting faster rate cuts.
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