UK Jobs Market Holds Steady Ahead of Bank of England Decision

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Photographer: Jose Sarmento Matos/Bloomberg Photo by Jose Sarmento Matos /Bloomberg(Bloomberg) — Britain’s labor market showed further signs of stabilizing and private sector wage growth dipped to the lowest since 2020, according to data published the week before the Bank of England’s next interest rate decision.THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLYSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.SUBSCRIBE TO UNLOCK MORE ARTICLESSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.REGISTER / SIGN IN TO UNLOCK MORE ARTICLESCreate an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.THIS ARTICLE IS FREE TO READ REGISTER TO UNLOCK.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountThe number of employees on payrolls fell just 4,000 in June following a 3,000 increase the previous month, the Office for National Statistics said on Tuesday. It was better than the 8,000 drop expected by forecasters.Job vacancies came in at 712,000 in the three months through June, largely flat compared with the previous period. Unemployment held at 4.9% in the three months through May, though the statistics agency has warned the estimate is of “reduced quality” due to a temporary issue. The unemployment rate among 16-24 year-olds edged up to 16.4%, the highest since 2014. Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againThe figures provided tentative signs that a downturn in the labor market was bottoming out just before Andy Burnham arrived in Number 10 Downing Street.The new prime minister has inherited a precarious economic backdrop with growth sluggish and unemployment rising in recent years. In his first speech as PM on Monday, Burnham pledged to forge a “new economic model” and give UK households more “breathing space.” On Tuesday he said he’d scrap VAT on energy bills.“The UK labor market appears to be stabilizing after a prolonged period of weakness,” said Andrew Hunter, senior economist at Moody’s Analytics. “This suggests the labor market has weathered the recent energy shock and that the longer-running drag on employment from increases to the minimum wage and national insurance taxes is finally fading.”What Bloomberg Economics Says…“The trend in payrolls is down and vacancies fell further, in a sign that higher energy costs and tighter funding conditions may be dampening demand.“The data give the Bank of England cover to keep rates unchanged at the July meeting.”— Read Ana Andrade, Dan Hanson and Matt Bunny’s REACTThe ONS’s measure of payrolls had been steadily declining since the previous Labour administration, led by Keir Starmer, announced a hike to employment taxes and the minimum wage during its first year in power. In 2026, the energy shock from the Iran war and UK government plans to strengthen workers’ rights have brought fresh uncertainty to the labor market.The state of the jobs market is crucial to BOE rate-setters with officials hoping that weak demand for workers will limit any second-round inflation effects triggered by the spike in energy prices. The UK central bank is expected to leave borrowing costs unchanged next week with traders seeing just a 14% chance of a quarter-point hike. Investors are expecting a move before the end of the year, however, following the fresh surge in tensions between the US and Iran.This advertisement has not loaded yet.This advertisement has not loaded yet, but your article continues below.The ONS said wage growth excluding bonuses held steady at 3.4% in the three months through May. Private sector wages — which are watched most closely by the UK central bank — rose 2.9% year-on-year in the three months through May — the slowest pace since October 2020.“The labor market remains very weak, which continues to suggest that conditions aren’t conducive of meaningful second-round inflation effects,” said Ruth Gregory, deputy chief UK economist at Capital Economics. “Today’s release doesn’t change our view in our baseline scenario that the Bank won’t raise rates from 3.75%.”—With assistance from Irina Anghel and Selina Chen.(Adds context from sixth paragraph. A previous version corrected wording on the direction of change in the numbers.)Notice for the Postmedia NetworkThis website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.