Jobs data shows cooling economy

Official data show wage growth slowing and payrolls dipping, signaling a cooling jobs market amid policy changes.

Reeves says there is more to do on jobs as payrolls fall

Official statistics show wage growth slowed in the three months to June, with average weekly earnings, including bonuses, up 4.6 per cent, down from 5 per cent in the prior quarter. Private sector earnings rose 4.8 per cent, below the Bank of England forecast of 5.2 per cent and the weakest reading since January 2022.

Payroll numbers fell by 164,000 in July compared with July last year, taking the total on payrolls to 30.3 million, the lowest since October 2023, according to the Office for National Statistics. Chancellor Rachel Reeves linked the data to the government’s policy changes and said there is more to do on jobs.

The data paints a picture of a labor market that is losing some heat even as inflation remains a concern for households. Policy makers face a delicate balance between supporting employment and keeping costs in check. The fall in payrolls, alongside slower wage growth, suggests the labour market is adjusting to recent fiscal moves, but the full impact will unfold over the next few quarters.

This kind of shift invites scrutiny of policy timing and messaging. If the economy weakens further, the government may need to clarify its plan to protect workers while pursuing fiscal goals, lest confidence in the recovery falters.

Highlights

The data will test the resolve of policymakers and the patience of markets.