‘The UK labour market continues to soften. Vacancies fell by 58,000 to 957,000 in the three months to October, down for a sixteenth consecutive period.
The latest ONS experimental figures suggest the unemployment rate was unchanged at 4.2%, while the employment rate dipped slightly to 75.7%. The inactivity rate was stable at 20.9% and remains above pre-pandemic levels.
Regular pay growth dipped to 7.7% year-on-year in the three months to September, down from a peak of 7.9%, though remains elevated. Workers are belatedly seeing their wages rise in real terms, at 1.3% year-on-year. A further substantial fall in consumer price inflation is expected to have occurred in October, perhaps below 5%, which will deliver a further boost to the value of pay packets.
The questionable veracity of the ONS figures derived from the Labour Force Survey means it’s hard to confidently assess how fast the labour market is rebalancing, particularly on the labour supply side. But there are reasons to believe, as the Monetary Policy Committee does, that wage growth will prove fairly persistent into next year.
The Indeed Wage Tracker, based on posted wages for new hires, edged down to a six-month low of 7.0% year-on-year in October, from 7.1% in September. Wage growth remains high though in a range of predominantly lower-paid occupations including hospitality, manufacturing, distribution, cleaning and childcare.
This reflects lower jobseeker interest in those categories versus pre-pandemic, while Brexit has added to hiring challenges. Moreover, the Chancellor has committed to at least a 5.6% rise in the national living wage next April.’