UK Labor Market Shows Signs of Cooling, According to Latest ONS Data
The UK’s unemployment rate has risen to 4.3% in the three months to September, up from 4% in the previous quarter, according to the Office for National Statistics (ONS). However, the organization has urged caution when interpreting these figures due to potential data collection issues.
Key highlights of the labor market report include:
Wage Growth and Inflation:
– Pay growth has slowed, with annual rates excluding bonuses at 4.8% – the lowest in over two years
– Despite the slowdown, wages are still rising faster than inflation
– Real wages continue to show positive growth, indicating improved purchasing power
Job Market Trends:
– The number of job vacancies continues to decline, a trend ongoing for more than two years
– Total job vacancies remain slightly above pre-pandemic levels
– Liz McKeown from ONS described this as a “continued easing of the labour market”
Economic Context and Business Implications:
Several factors are influencing the current labor market:
1. Budget Considerations:
– Some businesses have paused hiring ahead of the recent Budget
– Supermarkets like Asda, Sainsbury’s, and Marks & Spencer anticipate increased costs due to:
– National Insurance contributions hike
– Minimum wage increases from April
2. Potential Business Responses:
– Businesses might:
– Restrict hiring
– Limit wage increases
– Raise prices to offset additional expenses
Bank of England’s Perspective:
– The central bank closely monitors jobs data for interest rate decisions
– Recently cut rates for the second time this year
– Current inflation is below the 2% target at 1.7%
Expert Analysis:
Rob Wood from Pantheon Macroeconomics noted:
– Unemployment is gradually rising
– Labor market remains tight
– Wage growth is slowing but still potentially high for sustainable inflation targets
Political Response:
Work and Pensions Secretary Liz Kendall emphasized:
– More needs to be done to improve living standards
– From April, three million low-paid workers will benefit from minimum wage increases
Economist Outlook:
– Most experts do not anticipate these figures will prompt another Bank of England rate cut in December
– The ONS’s data collection challenges mean the figures should be interpreted with caution
The report suggests a nuanced economic landscape: while the job market is cooling, it remains relatively stable, with ongoing adjustments in response to economic policies and business challenges.
