- Regular earnings (excluding bonuses) down from 7.8% to 7.7%, but in real terms wages have increased by most in two years
- Unemployment unchanged at 4.2%
- Vacancies fall for 16th consecutive period – however, still 957,000 jobs to fill
In this analysis, Danni Hewson, AJ Bell head of financial analysis, sheds some light on today’s release of the ONS’ latest UK jobs figures:
“There might be big questions being asked about the health of the data itself, but the numbers released today indicate the UK labour market is cruising along despite tricky economic conditions.
“Vacancy numbers have dropped off once again but there are still more than 950,000 positions that need to be filled if businesses are to fulfil their potential.
“Those gaps are restaurants that must limit the number of hours they can serve customers, production lines that could run for longer and start-ups desperate for skilled labour to help them grow.
“The status quo isn’t bad, but it shines a light on an ongoing problem – how do we get those people in the ‘economically inactive’ bracket back into the workforce?
“Who are they and why aren’t they working are both good questions that need answers. This is an issue the ONS is hyper aware of and one it’s hoping to overcome by a series of new measures including paying people more to complete those all-important surveys.
“The big number that will be scrutinised by economists, politicians and central bankers alike is pay growth.
“The pace has eased back ever so slightly from 7.8 to 7.7%, but it’s still historically high and will make for uncomfortable reading by MPC members when they next meet in December.
“When adjusted for inflation it means people are finally feeling the benefit in their pay packets and with inflation expected to have cooled significantly last month it is an indication that the worst of the cost-of-living squeeze might be over.
“But there lies the rub. If households are feeling more confident and have a bit more room in the budget they are likely to spend that cash, which could prove inflationary.
“There’s also the continued tightness in the labour market that could force employers’ hands and push them to keep offering bigger pay packets to attract the staff they need to thrive.
“Over the last couple of years, we’ve begun to get used to bad news masquerading as good. The latest jobs numbers seem to fit into that pigeonhole though without the full picture it’s hard to judge where the cracks are widening.”
