- Unemployment rises again to 4.6% in the three months to April
- Pay growth slows to 5.2% – 2.1% when adjusted for inflation
- Vacancy numbers experience 35th consecutive quarterly decline and now stand 59,000 below pre-Covid levels
Danni Hewson, AJ Bell head of financial analysis, comments on the latest UK jobs figures:
“Businesses were clear and vocal following last year’s Budget. They said increased labour costs would impact their ability to recruit new staff, and the latest official jobs figures show the number of vacancies has fallen to almost 60,000 below pre-pandemic levels and unemployment is up.
“Even before the increases to employer national insurance came into force companies were paring back their hiring, trying to do more with fewer people whilst they figure out if they can pass on increased costs to inflation weary customers.
“There’s no doubt that US trade policies have contributed to business uncertainty and there will be companies who have put off investment whilst they figure out exactly what new trade deals might mean for them.
“Wage growth has fallen, though it is still outstripping inflation, and today’s figures are already impacting market expectation when it comes to rate cuts. Whilst the smart money is still on no cut at the Bank of England’s meeting next week, the softening in the labour market and cooling wage increases have added to expectations that the MPC will deliver another cut later in the summer.
“UK growth may have outperformed at the start of the year, but the momentum is expected to have been short lived and a turgid labour market will only exacerbate the situation.
“For a chancellor focused on delivering growth, these latest figures won’t make for comfortable reading. But now the changes are on the books, will employers be able to start moving forward or will they feel the need to wait until they know more about what might be required to balance Treasury books in the autumn?”
