- Written by Michael Race
- BBC News business reporter
Official figures show that wage growth has slowed again in the UK job market, but continues to outpace inflation.
Pay growth, excluding bonuses, fell sharply in the three months to November from 7.3% to 6.6%.
There are also signs that the job market is stalling, with the number of job openings declining for 18 consecutive years.
Retailers reported the sharpest decline in the number of empty seats, despite heading into the crucial Christmas shopping season.
Several major recruitment agencies have recently warned that the job market is slowing. Page Group, Mr Hayes and Robert Walters said confidence among employers was weak, with Mr Page pointing to the UK as the worst-performing market, with profits down by around a fifth.
The estimated number of job openings in the UK fell by 49,000 between October and December to 934,000, according to the Office for National Statistics (ONS).
However, vacancies remain above levels seen before the coronavirus pandemic.
Grant Pitzner, chief economist at the ONS, said on the BBC’s Today program that there were signs the labor market had “softened somewhat in recent months”, adding that the number of employers and businesses reporting recruitment difficulties was “lower than ever”. “This is a significant decrease in one year,” he added. .
Yael Selfin, chief economist at accountancy firm KPMG UK, said the slowdown in wage growth signaled “further weakness in the labor market going forward”, while chief executive of the Talent and Employment Confederation said: “The job market appears to be in a tough spot at the moment,” said Neil Carberry. Both employers and candidates are somewhat at odds with the economy as a whole, as they wait to see how the economy develops before taking on new roles. ”
Selfin said the “special circumstances” that drove wage increases, including strong demand for workers and demands for higher wages to keep pace with rising costs of living, “have receded in recent months.”
He added that the number of job openings is expected to fall further, which could push wage growth down towards 2% by the end of the year. “This is likely to strengthen the case for rate cuts later this year,” he said.
The Bank of England has raised interest rates multiple times to combat inflation, but in recent months has kept them at 5.25%, the highest level in 15 years.
Inflation has fallen sharply, and financial markets and some economists are suggesting the central bank may cut interest rates soon.
However, the Bank will closely monitor the fact that wage growth is outpacing price increases and consider whether a rate cut could accelerate inflation to 3.9%, almost double the Bank’s target of 2%. intend.
According to the ONS, annual public sector wage growth in the three months to November last year (6.6%) exceeded private sector wage growth (6.5%) for the first time since March 2021.
Overall wage growth reached 7.9% in the three months to August last year, the highest rate in “decades”, said ONS’s Mr Pfitzner.
Treasurer Jeremy Hunt said it was “encouraging to see real wages increasing for the fifth month in a row” as inflation fell.
Labour’s Shadow Work and Pensions Secretary Liz Kendall said the UK remained the only developed country with employment rates below pre-pandemic levels.
“2.6 million people are locked out of work due to long-term illness, and the cost to them and the taxpayer is at an all-time high,” he said, adding that Labor would “tackle the root causes of economic inactivity”. added.
According to the latest statistics, the unemployment rate has remained almost unchanged at 4.2%.
But Pfitzner said: “It’s worth pointing out that while we haven’t seen much change in the unemployment rate in recent months, it is higher than it was at this time last year, and there is some softening in the labor market.” said. That is reflected in the unemployment rate and reflected in job openings. ”
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