UK unemployment falls as wages growth hits lowest in two years
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The UK jobs market bucked predictions of a further weakening in June after official figures showed unemployment fell but wages growth slowed to its lowest for two years.
Unemployment unexpectedly dropped to 4.2% from 4.4% in the three months to June from the previous three months, according to the Office for National Statistics (ONS).
However, wage growth, excluding bonuses, was 5.4% year on year over the three months to June, slipping from 5.7% in the previous three months and represented the smallest increase since the period to July 2022, when it was 5.2%.
Adjusted for inflation, wages rose by 1.6%, meaning many workers will experience a continued improvement in their standard of living.
Vacancies also fell, giving a further indication that the jobs market is returning closer to pre-pandemic levels of activity.
Analysts were divided about how the figures would influence the Bank of England’s decision on interest rates when policymakers meet next month.
The National Institute of Economic and Social Research said wages growth, despite a fall, could push inflation higher, forcing the central bank to maintain interest rates at a high level for a longer period.
