UNEMPLOYMENT has fallen again and wage growth has slowed, new data from the Office of National Statistics (ONS) has revealed.
Wages grew at its lowest rate for more than two years between June and August, increasing at 4.9% for the year.
This was down from 5.9% in the previous three months of the year.
But earnings growth has continued to outstrip inflation, as pay increased by 2.6% in the three months to August with Consumer Prices Index inflation taken into account.
Pay growth has sunken sharply after hitting a record high of nearly 8% in the summer of 2023.
Wages are still growing but just at a slower rate than what was recorded before.
But the latest slowdown may give more room to the Bank of England to lower interest rates again next month.
Elsewhere, the estimated number of job vacancies in the UK decreased in the three months to September, by 34,000 in the quarter to 841,000.
The rate of unemployment in the UK fell to 4% down from 4.1% in the previous reading.
The decrease marks the 27th month in a row that vaccines declined but the figure is still above pre-pandemic levels.
David Freeman, head of the ONS labour market and household division, said last year’s “one-off payments” made to public sector workers have continued to “affect the figures for total pay”.
“Vacancies have fallen once more, with most industries seeing a fall on the quarter,” he added.
Commenting on the figures, work and pensions secretary Liz Kendall said her government would get “Britain working again”.
She explained: Millions of people are locked out of work due to long-term sickness. This is not good for them, for our economy or for the taxpayer.”
“That’s why we will bring forward the biggest reforms to employment support in a generation – overhauling jobcentres, delivering a Youth guarantee so every young person is learning or earning, and new work, health and skills plans to tackle inactivity – unlocking opportunity and potential in every area of the country.”
The ONS will publish its latest figures for inflation, with economists predicting the figure will fall to 2%.
Inflation is the rate at which goods increase have increased over time, and is used to measure the cost of living.
Last month the figure was held 2.2% after rising to the same figure the month before.
While cooling inflation is often seen as a good sign, consumer confidence has taken a nose dive in recent weeks.
Many Brits are not feeling hopeful for the winter as they gear up for what is predicted to be a painful budget for their wallet.
Alice Hayne, personal finance analyst at Bestinvest by Evelyn Partners, the wealth manager, said Budget speculation may be “creating anxiety” for consumers.
However, she said that there may still be some hope if the Bank of England pushes ahead with its second interest rate cut in November.
The BoE raises or lowers its base rate, which dictates what interest rates are charged to banks, in order to control inflation.
By raising, it is supposed to make the cost of borrowing more expensive and control spending, therefore driving down inflation.
The BoE started raising its base rate in December 2021 as the UK economy emerged from the coronavirus pandemic.
But the BoE cut rates from 5.25% to 5% in August, marking the first cut since 2020 in a boon for borrowers.
If inflation shows signs of easing tomorrow, then economists at the central bank to lower rates again next month.
This could lead to lower interest rates on costly loans such as a mortgage.
She explained: “A cooling jobs market, slowing pay growth and inflation expected to dip below 2% on Wednesday, certainly raise the chances of further monetary policy loosening when central bank policymakers next meet in November.”.
Meanwhile, Alice said keeping personal finances on track will remain “key” for households in the run-up to the more expensive festive season.
She added: “Building a robust emergency fund to cover any periods without earned income, paying down expensive debts and even taking out an income protection policy are all ways to ease financial fears for households with no back-up funds worried about how they would cope should the worst happen, and the main breadwinner loses their job.”
INFLATION is a measure of the cost of living. It looks at how much the price of goods, such as food or televisions, and services, such as haircuts or train tickets, has changed over time.
Usually people measure inflation by comparing the cost of things today with how much they cost a year ago. The average increase in prices is known as the inflation rate.
The government sets an inflation target of 2%.
If inflation is too high or it moves around a lot, the Bank of England says it is hard for businesses to set the right prices and for people to plan their spending.
High inflation rates also means people are having to spend more, while savings are likely to be eroded as the cost of goods is more than the interest we’re earning.
Low inflation, on the other hand, means lower prices and a greater likelihood of interest rates on savings beating the inflation rate.
But if inflation is too low some people may put off spending because they expect prices to fall. And if everybody reduced their spending then companies could fail and people might lose their jobs.
See our UK inflation guide and our Is low inflation good? guide for more information.
