The UK unemployment rate fell to 4.9 percent in the three months to April, but private sector pay growth continued to weaken and vacancies dropped to their lowest level in more than five years, according to official figures released on Wednesday.
Data from the Office for National Statistics (ONS) showed the unemployment rate fell by 0.3 percentage points on the previous quarter, while the employment rate remained largely unchanged at 75.0 percent. Economic inactivity among people aged 16 to 64 rose to 21.0 percent.
The figures also showed further signs of cooling in the labour market. Annual growth in regular pay excluding bonuses was 3.4 percent, while private sector pay growth slowed to 2.9 percent. Public sector pay growth stood at 5.1 percent.
Payroll employment and vacancies continue to fall
While the headline unemployment figure improved, other indicators painted a more subdued picture of the jobs market.
The number of payrolled employees fell by 138,000 over the year to April and by 53,000 between March and April alone. Early estimates for May suggest payroll employment was broadly unchanged month-on-month but remained lower than a year earlier.
Vacancies also continued to decline. The estimated number of vacancies fell by 19,000 to 707,000 in the three months to May, the lowest level recorded since February to April 2021.
The ONS said caution should be exercised when interpreting short-term movements in labour market data because of ongoing volatility in survey estimates. However, the overall direction of travel points to a labour market that is becoming less tight than it was in previous years.
After accounting for inflation, wage growth remained positive but subdued.
Regular pay increased by 0.1 percent in real terms using the Consumer Prices Index including owner occupiers' housing costs (CPIH), while total pay increased by 1.2 percent. Using the Consumer Prices Index (CPI) measure, regular pay rose by 0.3 percent in real terms and total pay by 1.3 percent.
The latest figures come as employers continue to balance cost pressures against recruitment and retention challenges. Recent labour market surveys have suggested many organisations remain cautious about hiring amid wider economic uncertainty and rising employment costs.
The combination of slower wage growth, falling vacancies and declining payroll employment may ease some of the recruitment pressures that characterised the post-pandemic labour market.
However, the data does not point to a sharp deterioration in employment conditions. Employment remains broadly stable, unemployment remains below 5 percent and real wages are still growing, albeit slowly.
The claimant count increased to 1.712 million in May, providing another indication that labour market conditions are becoming more challenging for jobseekers than they were during the recent period of labour shortages.
