UK wage growth has slowed and unemployment has climbed to its highest level since the pandemic lockdowns ended, according to official figures released today.
Data from the Office for National Statistics (ONS) showed that regular pay, excluding bonuses, grew by 5.2% in the three months to April. That marks a dip from 5.5% in the previous period and comes in slightly below the 5.3% figure forecast by analysts.
At the same time, the UK unemployment rate edged up to 4.6% — the highest level since July 2021 — highlighting continued softness in the labour market. The figure is up from 4.5% and adds to mounting evidence that the post-Covid employment boom is waning.
The data are likely to be closely watched by the Bank of England, with Governor Andrew Bailey having told MPs last week that a sustained easing in wage pressures would be an essential condition for further interest rate cuts.
The latest slowdown in earnings growth could support the case for a reduction in borrowing costs, particularly as inflation continues to edge closer to the Bank’s 2% target. However, with wage rises still historically strong and employment conditions deteriorating, the path for monetary policy remains finely balanced.
Economists have warned that falling job vacancies and rising redundancies could weigh further on pay expectations in the months ahead, even as some sectors continue to experience staff shortages.
Today’s figures come ahead of next week’s Bank of England monetary policy meeting, where rates are expected to be held steady. Markets will now be watching closely for signals that the central bank is preparing to loosen policy later this summer.
For businesses and households alike, the prospect of cooling wage growth and rising unemployment paints a mixed economic picture — one that reflects both the success of recent disinflationary efforts and the emerging risks of a broader slowdown.
