Labour market indicators

Rising unemployment, and rising earnings growth for those in work, were the two standout trends in last month’s labour market data, according to the Office for National Statistics (ONS).

The unemployment rate for April to June 2023 increased by 0.3 percentage points to 4.2%, driven by people unemployed for up to six months, the ONS said.

Alongside that, there was a smaller drop in employment (0.1 percentage points) driven by full-time employees and self-employed workers (despite a payrolled employment increase of 97,000) while the economic inactivity rate also fell by the same margin.

A “large” net movement of people from economic inactivity into unemployment contributed to these statistics, but a further fall in vacancies still left the total at 1.02 million.

For those in work, the rate by which earnings grew rose to 8.5% on total pay including bonuses, and 7.8% in regular pay excluding bonuses — the highest regular annual growth rate since comparable records began in 2001.

Total pay growth in the public sector shot up to a never-before-seen spike of 16.5%, which the ONS attributed to an NHS pay deal involving non-consolidated bonus pay awards. However, at 6.5% regular public sector pay growth still lagged behind the private sector’s 8.3%.