Britain’s labour market exhibited further signs of cooling in August, with payroll employment declining again and wage growth decelerating, according to data from the Office for National Statistics (ONS). The number of people on payrolls decreased by 8,000 to 30.3 million in August, following a revised drop of 6,000 in July. Over the past year, payroll figures have contracted by 127,000.
The unemployment rate remained steady at 4.7% for the three months to July, consistent with forecasts. However, the latest figures indicate a slowdown in hiring as the demand for workers continues to weaken. Job vacancies fell by 10,000 to 728,000, marking 38 consecutive months of declining job openings.
Pay growth also showed signs of slowing. Average weekly earnings excluding bonuses increased by 4.8%, down from 5%, while pay including bonuses rose by 4.7%. Economists and the Bank of England monitor wage data closely as it serves as a key indicator of inflation.
These figures precede the Bank of England’s upcoming policy meeting. Interest rates are expected to remain unchanged at 4%, following a reduction in August, the fifth cut within a year. Market expectations suggest rates could remain on hold for the rest of 2025, as policymakers focus on combating inflation despite evidence of a cooling jobs market.
Inflation data due on Wednesday is projected to show annual price growth of between 3.8% and 3.9% in August, almost double the Bank’s 2% target. Liz McKeown, ONS Director of Economic Statistics, remarked, “The labour market continues to cool, with the number of people on payroll falling again, while firms also reported fewer jobs in the latest period.”
The combination of reduced hiring, declining vacancies, and moderating pay growth raises concerns that the post-pandemic jobs boom may have definitively ended, with sectors from retail to construction experiencing significant slowdowns in worker demand.
