UK Wage Growth Declines as Unemployment Reaches 4.8%

The latest data from the Office for National Statistics (ONS) reveals a downturn in UK wage growth as the unemployment rate rose to its highest level since early 2021. In the three months leading to August 2023, regular wage growth decreased to 4.7%, down from 4.8% in the preceding quarter. This marks a new low for earnings growth, reflecting ongoing challenges in the labour market.

The ONS reported that the unemployment rate climbed to 4.8% during the same period, up from 4.7% in the previous three months. This figure has not been seen since January 2021 and suggests a shift in the job market. While the ONS cautioned that this data should be interpreted carefully due to ongoing adjustments to its labour market survey, some indicators suggest that the jobs market may be stabilising.

Signs of Stabilisation in the Job Market

Despite the increase in unemployment, there are signs that the decline in job numbers might be leveling off. The ONS noted a marginal increase of 10,000 workers on payrolls between July and August, building on a slight rise from the previous month. However, preliminary estimates indicated a decrease of 10,000 in payroll numbers for September, bringing the total to 30.3 million.

According to Liz McKeown, ONS Director of Economic Statistics, “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.” This statement highlights a potential turning point for the labour market after a prolonged period of uncertainty.

The data also revealed differing trends across age groups. A record number of individuals over the age of 65 are remaining in the workforce, while the recent rise in unemployment was predominantly driven by younger workers. This demographic shift may influence future workforce dynamics and economic policies.

As the UK navigates these labour market changes, the impact on consumer spending and overall economic growth will be closely monitored. The interplay between wage growth and employment rates will be crucial in shaping policy responses and addressing the challenges faced by workers in the current economic climate.