Job vacancies continue to fall and wage growth is slowing, according to official statistics that will raise concerns in Downing Street.
The annual rate of pay growth in the three months between March and May was 5%, the latest figures from the Office for National Statistics (ONS) show, down from the previous figure of 5.2%.
Meanwhile, the number of vacancies has fallen 56,000 to 727,000 and the unemployment rate rose to 4.7%, up 0.1% from April and its highest rate for four years. In Scotland, the unemployment rate estimate was better than the UK average at 3.7%.
There are now 2.3 people across the UK seeking work per vacancy available in the most challenging labour market in recent years. The number of payrolled employees has fallen by 178,000 since Labour came to office last July.
The figures will put more pressure on the Bank of England to cut interest rates next moth, despite yesterday’s data showing inflation ticked up to 3.6%.
Ben Harrison, director of the Work Foundation at Lancaster University, said: “Today’s figures suggest the UK’s labour market is in a challenging transition. Data shows more employers are holding back from hiring, the pace of pay growth is easing but the number of people beginning to look for work is on the rise.
“Although these figures may reflect a reduction in business confidence to recruit as employment costs rise, it also appears more people are moving out of economic inactivity to begin looking for work.
“Economic inactivity has fallen to 21%, the lowest percentage since the onset of the pandemic in early 2020, and down 375,000 people on the year.”
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