The Office for National Statistics (ONS) has said that UK earnings growth has fallen to the lowest level since 2022 and eased back to 4.9% in the three months to July.
There is further signs of a weakening jobs market according to the ONS, but earnings outstrips inflation as in the three months to August pay rose by 2.6%, this is with the Consumer Prices Index inflation taken into account.
In the quarter to September vacancies fell by 34,000 to 841,000, this is the lowest level since March to May 2021.
In the quarter to August there was an increase in employment by 373,000 which is the highest since records started in 1971, this take the total number of people in work to 33.4 million in the period.
David Freeman, head of the ONS labour market and household division, said: “Over the last three months the number of people on payrolls has stayed broadly flat.
“The labour force survey shows a different picture and we would advise caution when interpreting changes in these data while we continue to improve survey responses.
“Vacancies have fallen once more, with most industries seeing a fall on the quarter.”
Ben Keighley, co-founder of AI recruitment platform Gaia said, “A drop in unemployment in August has been partly overshadowed by the slowdown in wage growth and a decline in the number of payrolled employees.
“However, pay is still rising faster than inflation and the data has been affected by one-off payments made to workers in the public sector.
“The headline figures only tell part of the story and while there are positives to be taken, businesses are facing greater uncertainty when it comes to recruitment.
“The big question is how the government’s Employment Rights Bill will impact hiring moving forward. It has been a turbulent few years for employers and there is a risk that these news laws will unsettle some businesses and disrupt hiring strategies.
“Businesses also face the prospect of a hike in National Insurance as the Chancellor, Rachel Reeves, endeavours to reduce the UK’s budget deficit.
“This tax change could significantly increase employers’ payroll bills and may negatively impact salary increases, bonuses and hiring decisions.
“Small and medium-sized businesses are the engine of the UK economy and it’s important that firms feel confident to invest in growth.
“A flourishing jobs market is good for the UK’s economic prospects and hopefully we will see an increase in hiring in the months ahead.
“Employers may have to adapt their plans in response to these latest challenges, but with the right strategy in place they can continue to press ahead with recruitment.
“Each new hire may carry greater importance, so making sure you recruit the right candidate is crucial. To do this, businesses should consider specialist expertise and accessing new recruitment tools and technology to identify preferred candidates before they start searching for a job.
“This approach will hand businesses an advantage over their competitors and increase the size of the talent pool from which they can attract new candidates.”
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