Labour market indicators

Upward pay pressure in the labour market appears to be dropping off.

Wage growth fell to 4.9% in the three months to August, which is the first time since June 2022 that the headline figure has been below 5%.

But because of high inflation over that period, workers are only about £14 a week better off in real terms than two years ago, according to the Work Foundation. Taking RPI inflation into account, real wages are only up 2.7% this year.

The number of PAYE employees has been falling or flat since May, leading the Resolution Foundation to warn that “the UK’s brief era of healthy real terms pay growth” could be coming to an end soon.

The number of vacancies is continuing to decline, but for now the number is still above the pre-pandemic level. In July-September 2024, the number of vacancies in the UK decreased by 34,000 on the quarter to 841,000.

Meanwhile, the unemployment and inactivity rates are both down compared to last year. Unemployment was down 0.4 percentage points to 4.0% in June-August 2024.

The economic inactivity rate (which includes students, unpaid carers, and people out of work due to long-term sickness) was estimated at 21.8% in June-August 2024, below last year’s figure.