The UK labor market showed clearer signs of cooling as vacancies fell to their lowest level in 12 years and payroll employment remained below year-earlier levels, even as the unemployment rate edged down.
The Office for National Statistics estimated unemployment at 4.7% in the three months through August, down 0.1 percentage point from both the previous quarter and a year earlier. The employment rate rose to 75.3%.
UK Labor Market Loses Momentum in Hiring
Vacancies declined by 21,000 in the July-to-September period to 691,000, according to the ONS labor-market bulletin. Excluding the pandemic, that was the lowest total since the third quarter of 2014.
The annual decline in vacancies reached 37,000, or 5.1%. Survey feedback indicated that smaller companies continued to hold back recruitment because of higher labor costs, making the vacancy data an important signal of employer caution.
Administrative payroll figures pointed in the same direction. Payrolled employment in August was 111,000 lower than a year earlier. A provisional September estimate showed a smaller annual decline of 66,000 and a monthly increase of 13,000 to 30.3 million, although that early reading is subject to revision.
The claimant count rose to an estimated 1.701 million in September. The ONS cautioned that recent claimant-count estimates have often been revised as benefit records are updated.
Wage Growth Holds While Total Pay Slows
Regular earnings excluding bonuses grew 3.7% from a year earlier in the three months through August. Total pay growth also registered 3.7%, down from 3.9% in the previous three-month period and the weakest rate in nearly six years.
After inflation, regular pay rose 0.8% using the consumer price index, while total pay increased 0.9%. The figures suggest that households retained modest real-income growth even as the pace of nominal wage gains softened.
For the Bank of England, the combination is mixed. Lower vacancies and weaker payrolls support the case that labor demand is cooling, while 3.7% wage growth may still warrant caution if inflation remains elevated. The next policy judgment will depend on whether softer hiring translates into a more persistent moderation in private-sector pay and services prices.
