UK unemployment held at 4.9% in the three months to July, below the 5.0% consensus estimate, but vacancies fell to their lowest level outside the pandemic since 2014 and payrolled employment kept slipping, a labour market cooling gradually rather than cracking.
What the Data Showed
The Office for National Statistics released its Labour Market Overview this morning, showing the unemployment rate for those aged 16 and over held at 4.9% in the three months to July, unchanged on the previous three-month period and below the 5.0% consensus estimate compiled ahead of the release. The rate remains 0.2 percentage points higher than a year earlier. The employment rate for 16 to 64-year-olds was 75.1%, down 0.1 percentage points on the year, while the economic inactivity rate, the share of working-age people neither working nor looking for work, eased to 20.9%.
Beneath the headline figure, the data pointed to continued underlying erosion. Vacancies fell by 8,000, or 1.1%, to 702,000 in the three months to August, the lowest level outside the pandemic period since the three months to October 2014. HM Revenue and Customs payroll records, a timelier alternative to the survey-based unemployment figure, showed the number of employees on payroll fell by 101,000, or 0.3%, year-on-year to July, with an early flash estimate suggesting a further fall of 26,000 in August. Those figures are subject to revision.
Wage growth also cooled. Regular pay, which excludes bonuses, rose 3.5% year-on-year, in line with the estimate and unchanged from the prior reading. Total pay, including bonuses, rose 3.9%, down from 4.2% in the previous three-month period and the lowest reading since the three months to November 2020.
| Indicator | Latest | Detail |
|---|---|---|
| Unemployment rate | 4.9% | Unchanged on quarter, +0.2pp year-on-year |
| Vacancies (Jun-Aug) | 702,000 | -8,000 (-1.1%); lowest outside pandemic since Aug-Oct 2014 |
| Payrolled employees (RTI, July) | -101,000 y/y | -19,000 m/m; flash August estimate -26,000 |
| Regular pay growth | 3.5% y/y | In line with estimate, unchanged on prior reading |
| Total pay growth | 3.9% y/y | Down from 4.2%; lowest since three months to Nov 2020 |
Why It Matters for Markets
The pound was little moved. GBPUSD closed at 1.3476, down from yesterday’s close of 1.3526, having ranged as low as 1.3465 intraday. GBPEUR slipped to 1.1674 from a 1.1689 close yesterday. Both moves are modest, and the release did not trigger a sharp break in either pair.
The Bank of England’s Bank Rate stood at 3.75% as this data was published, unchanged from yesterday.
What’s Next
For now, the labour market reads as cooling gradually rather than cracking, with the Bank of England’s Bank Rate remaining at 3.75%.