The UK's jobless rate held steady in the three months to July amid a decline in job vacancies and cooling labor market conditions, data from the Office for National Statistics showed Tuesday.
The unemployment rate for people aged 16 years and over stood at 4.9% in the three months to July, unchanged from the prior three-month period. The latest reading, released ahead of the Bank of England's monetary policy meeting on Thursday, came in a touch below the consensus estimate of 5%. Meanwhile, the UK employment rate for people aged 16 to 64 years stood at 75.1%.
"The labour market remains broadly stable, with employment and unemployment rates largely unchanged in the latest period. However, payrolled employee numbers continue to edge down, with falls over the past year particularly evident in the retail and hospitality sectors," ONS Director of Economic Statistics Liz McKeown said. "Vacancies remain at their lowest level outside the pandemic period for more than a decade, with smaller businesses continuing to report that increased labour costs are affecting hiring decisions."
The estimated number of job vacancies in the UK dropped by 8,000 to 702,000 in the June to August 2026 period, marking the lowest level since February to April 2021, according to the ONS. Ten out of 18 industry sectors reported a decrease in vacancies.
Meanwhile, employees' average regular earnings growth, excluding bonuses, came in at 3.5% year over year in the three months to July, remaining stable for the fifth consecutive three-month period. On the other hand, growth in total earnings, including bonuses, declined to 3.9% from 4.2%.
In the public sector, the annual average growth in regular pay stood at 6.3%, up from 6.2% in the previous three-month period, while regular earnings growth in the private sector was unchanged at 2.9%.
"The labour market data for July and August confirm that disinflation in domestic price pressures remains intact. This allows the BoE to keep interest rates unchanged on Thursday," Berenberg said in a note.
"Much looser labour market conditions than during the last major energy price shock in 2022 make a new price-wage spiral highly unlikely. Nonetheless, we expect the BoE to signal that it will hike in November unless energy prices fall back, to guard against the risk of persistent high inflation."
