UK jobs market cools as unemployment rate rises

The UK jobs market has weakened as the number of job vacancies continues to fall and wage growth slows, according to official statistics.

The annual rate of pay growth in the three months between March and May slowed to 5%, the latest figures from the Office for National Statistics (ONS) show, while the unemployment rate rose to 4.7%.

Meanwhile, the number of vacancies fell again to 727,000 for the April to June period, marking three continuous years of falling job openings.

Economists say the Bank of England may choose to cut interest rates at its meeting next month to boost the labour market.

Earlier this week, in an interview with the Times, the Bank of England governor Andrew Bailey indicated there could be larger cuts to interest rates if the jobs market showed signs of slowing down.

Most economists are predicting a cut – though some say it would be unwise to encourage spending while inflation is still rising.

The ONS said survey data suggested that some firms may not be recruiting new workers or replacing ones who have left.

The number of job vacancies is now at its lowest in 10 years, excluding the plunge seen during the pandemic when lockdowns stopped firms from hiring.

While the unemployment rate rose, the ONS has flagged that the figures need to be treated with caution due to problems with how they are collected.