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Britain’s jobs market stabilized over the summer after a year of employer withdrawal, according to official figures that economists say keep the Bank of England on track to keep interest rates unchanged next month.
Figures released on Tuesday by the Office for National Statistics show paid employment increased by 10,000 between July and August, with provisional figures for September showing a fall of 10,000.
Revisions to data from previous months mean the decline in payroll employment since last year’s tax-increase budget now appears smaller, with a fall of 90,000 instead of the previous estimate of a fall of 126,000.
“After a long period of low hiring activity, there are signs that the falls we saw in both payroll figures and job vacancies are now stabilizing,” said Liz McKeown, director of economic statistics at the ONS.
However, separate figures from the ONS Labor Force Survey show that unemployment in the UK rose to 4.8 per cent in the three months to August, driven by higher unemployment among younger workers.
Job vacancies also continued to decline, albeit at a slower rate than before.
Economists said the figures were unlikely to change the BoE’s cautious approach to further interest rate cuts, as policymakers await clearer evidence of a continued easing of wage pressures.
The bank’s monetary policy committee voted to keep interest rates at 4 percent in September. It meets next month and again in December.
Tuesday’s data highlighted a slowdown in wage growth in the private sector, with the annual increase in average wages, excluding bonuses, falling to 4.4 percent in the three months to August, the lowest rate since December 2021.
Andrew Wishart, an economist at Berenberg, said slowing private sector wage growth would give the BoE “confidence that inflation will ease in the future”, but he sees “little chance of a further cut in interest rates this year, as employment already appears to be stabilizing”.
The increase in public sector wages kept overall wage growth higher at 4.7 percent, figures released Tuesday showed, in line with analysts’ expectations. Including bonuses, wage growth increased from 4.8 percent to 5 percent.
Thomas Pugh, an economist at auditing firm RSM UK, said that with total wage growth still strong and inflation forecast to hit 4 per cent in September, “this will not be enough to cause a rate cut next month”, he said.
Sterling was down 0.3 percent against the dollar late afternoon in London at $1.329. Depending on the levels implied by the swap markets, the probability of a quarter-point rate cut before the end of the year has increased from around 30 percent to 45 percent.
Ashley Webb, of consultancy Capital Economics, said the combination of slowly weakening hiring and wage growth meant the BoE would “remain more concerned about upside risks to inflation than downside risks to activity”.
Additional reporting by Ian Smith
