Labour market indicators

The latest labour market indicators from the Office for National Statistics show that unemployment is down slightly, while vacancies remain elevated. Key indicators include:

• the employment rate was 74.5% in April to June 2024, lower than last year, with a 0.8% annual increase in the number of payrolled employees;

• the unemployment rate was 4.2%, down from 4.4% in the previous quarter, and the claimant count for July 2024 is 1.81 million;

• the economic inactivity rate (which includes students, unpaid carers, and people with long-term sickness) increased to 22.2%; and

• the number of vacancies is continuing to fall, although these are still 11.0% higher than the pre-pandemic period.

The economic inactivity rate remains relatively high (see page 25), and chancellor Rachel Reeves has warned of “difficult decisions on spending, welfare and tax” to bring it down.

Pay growth has been slowing down.

Earnings were up 5% on the year across the whole economy, compared to a growth rate of 8% last year. The strongest pay growth was in manufacturing at 5.9%, and the public sector pay at 5.6%.

By contrast, pay in construction, hospitality and retail was up just 3.9% on the previous year, only just ahead of RPI inflation.