Wage growth slows slightly over summer

Wage growth in the UK cooled slightly over the summer, as unemployment ticked up slightly.

Annual growth in employees’ average earnings was 4.7% in the three months to August, down from 4.8% over the three months to July, according to new data from the Office for National Statistics (ONS).

The national unemployment rate rose slightly from 4.7% to 4.8%.

The ONS has said the unemployment rate should be treated with caution and it is taking additional steps to address concerns about the quality of the data.

Liz McKeown, the ONS’s director of economic statistics, said: “After a long period of weak hiring activity, there are signs that the falls we have seen in both payroll numbers and vacancies are now levelling off.”

Ms McKeown said the ONS was seeing different patterns among age groups, adding “the increase in unemployment was driven mostly by younger people.”

There was a quarterly drop in the number of people who were economically inactive because they were students or retired, but this was largely offset by a rise in economic inactivity for other reasons, including long-term illness and for other reasons.

Private sector earnings growth was the lowest in four years but was still ahead of inflation.

Annual growth in workers’ average earnings was 6% for the public sector and 4.4% for the private sector.

The ONS said the public sector annual growth rate is affected by some public sector pay rises being paid earlier in 2025 than in 2024.

After the public sector, the wholesaling, retailing, hotels and restaurants sector showed the strongest regular annual growth rate.