The UK’s labour market is showing signs of gradual cooling, according to the latest figures from the Office for National Statistics (ONS). The data reveals falling vacancies and rising unemployment. Employment trends showed varied short-term movements across different measures.
The Labour Force Survey (LFS) indicated a decrease in employment estimates, while HM Revenue and Customs’ (HMRC) Real Time Information (RTI) data showed an increase in payrolled employees. In May 2024, the number of payrolled employees in the UK increased by 54,000 (0.2 per cent) from April, and by 265,000 (0.9 per cent) from May 2023. The early estimate for June 2024 indicated a further increase of 16,000 (0.1 per cent) from the previous month and a rise of 241,000 (0.8 per cent) from June 2023, bringing the total to 30.4 million.
The UK employment rate for people aged 16 to 64 years was estimated at 74.4 per cent for the period of March to May 2024, reflecting a decrease from both the previous year and the latest quarter. The unemployment rate for those aged 16 years and over rose to 4.4 per cent in the same period, higher than estimates from a year ago and increasing in the latest quarter. Economic inactivity among people aged 16 to 64 years stood at 22.1 per cent between March and May 2024, an increase from the previous year but a decrease from the latest quarter.
Rising employment figures and unemployment trends
The UK claimant count for June 2024 rose both on a monthly and yearly basis to 1.663 million. The Department for Work and Pensions began rolling out an increase in the administrative earnings threshold for full work search conditionality in May 2024, expected to affect around 180,000 claimants over six months, contributing to the rise in the Claimant Count.
The estimated number of vacancies decreased by 30,000 in the quarter to April to June 2024, totalling 889,000. This marked the 24th consecutive quarterly decline, although vacancies remain above pre-COVID-19 pandemic levels. From March to May 2024, the annual growth in employees’ average regular earnings (excluding bonuses) in Great Britain was 5.7 per cent, with the same growth rate for total earnings (including bonuses).
In real terms, adjusted for inflation using the Consumer Prices Index including owner occupiers’ housing costs (CPIH), regular pay grew by 2.5 per cent and total pay by 2.2 per cent during this period. In May 2024, an estimated 49,000 working days were lost due to labour disputes across the UK. Despite the slowdown in pay growth, the Bank of England (BoE) is facing challenges as the jobs market cools at a slower rate than anticipated, which could impact decisions on interest rate cuts.
The BoE will meet on August 1 to discuss and release new forecasts which may address the impact of this sustained wage growth on inflation.
