UK wage growth slows and vacancies drop, as labour market cools – business live

TruthLens AI Suggested Headline:

"UK Labour Market Shows Signs of Cooling as Wage Growth Slows and Employment Falls"

UK wage growth slows and vacancies drop, as labour market cools – business live analysis cover image

The Guardian 8.1

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Original Article Source: https://www.theguardian.com/business/live/2025/may/13/uk-wage-growth-slows-payrolls-vacancies-drop-thames-water-mps-us-inflation-business-live-news

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Raw Article Publish Date: 13 May 2025

AI Analysis Average Score: 8.1

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TruthLens AI Summary

The latest labour market data from the UK indicates a notable slowdown in wage growth and a decrease in the number of payrolled employees, as the jobs market shows signs of cooling. In the first quarter of 2025, average regular earnings, excluding bonuses, rose by 5.6%, a decline from the 5.9% growth observed in the previous quarter. Similarly, total pay growth, which includes bonuses, also decelerated to 5.5%, down from 5.7% at the end of 2024. Despite this slowdown in wage increases, it is important to note that pay is still outpacing inflation, with real earnings rising by 2.6% annually when adjusted for price increases. The Minister for Employment, Alison McGovern, acknowledged the complexities of the current job market in light of these statistics.

In addition to the waning wage growth, the report highlights a significant drop in demand for workers, attributed to adjustments by UK companies to the recent increases in the minimum wage and national insurance contributions that took effect in April. The Office for National Statistics (ONS) reported a decline of 33,000 payrolled employees in April, following a 47,000 decrease in March, resulting in an annual reduction of 106,000 payrolled positions. Furthermore, the number of vacancies across the UK fell by 42,000 in the January-March quarter, marking the 34th consecutive quarterly decline, with the construction sector experiencing the most significant drop. With the unemployment rate rising to 4.5%, the highest level seen in nearly four years, economists express concern about the potential for a sustained slowdown in the jobs market, which may influence the Bank of England's decisions regarding interest rates in the near future.

TruthLens AI Analysis

The article provides insights into the current state of the UK labor market, highlighting a slowdown in wage growth and a reduction in job vacancies. This situation speaks volumes about the broader economic environment and the potential challenges ahead for both workers and employers in the UK.

Wage Growth Analysis

The report notes a decrease in wage growth in the UK, with average regular earnings rising by 5.6% in the first quarter of 2025, a decline from the previous quarter's 5.9%. Despite this slowdown, real earnings adjusted for inflation have increased by 2.6%. This suggests that while wages are still growing, the pace is not sufficient to keep up with the inflationary pressures that consumers might be facing. The emphasis on wage growth, or lack thereof, can shape public perception regarding economic stability and the cost of living.

Job Market Trends

The decline in the number of payrolled employees by 33,000 in April and the 106,000 fewer employees compared to the previous year indicates a cooling job market. This trend could evoke concerns about job security and economic growth among the public. The report notes a significant drop in vacancies, particularly in the construction sector, which could further reflect a cautious approach by employers in response to rising costs associated with hiring.

Impact of Policy Changes

The article mentions changes in the minimum wage and national insurance contributions as factors contributing to the labor market's cooling. This suggests a potential narrative that government policies, while aimed at improving workers’ financial conditions, may inadvertently lead to reduced hiring by businesses. Such a perspective could influence public sentiment towards government economic policies.

Public Perception and Trust

The way the article presents the data might evoke feelings of concern among the public regarding job security and economic prospects. By focusing on the negative trends in employment and wage growth, there might be an underlying intention to prompt discussions about governmental responsibility in managing the economy effectively.

Connection to Broader Economic Issues

This piece aligns with broader discussions about the UK economy, especially in the context of rising living costs and inflation. It suggests that the labor market's cooling could have ripple effects on consumer confidence and spending, which are crucial for economic recovery.

Potential Community Support

The report may resonate more with working-class communities who are directly affected by wage stagnation and job insecurity. It aims to highlight issues that are pertinent to these demographics, potentially fostering greater awareness and advocacy for change.

Market Implications

The implications of this news on stock markets and business sentiment could be significant. Companies that rely heavily on labor, particularly in sectors like construction, may see a negative impact on their stock prices due to concerns over reduced hiring and increased costs.

Global Context

In the context of global economic trends, this news could signal to investors and policymakers that the UK might be experiencing a slowdown that could affect its standing in the global economy. Investors often react to labor market data as it reflects consumer health and spending power.

Regarding the possible use of artificial intelligence in crafting this article, it is conceivable that AI could assist in data analysis or presentation. However, the narrative and contextual choices reflect a human touch, guiding the reader towards specific economic interpretations rather than merely presenting data.

The article ultimately appears to serve as a critical observation of the UK's labor market, aiming to raise awareness about ongoing economic challenges. It encourages readers to consider the implications of these trends on their lives and the broader economy.

Unanalyzed Article Content

Source URL: https://www.theguardian.com/business/live/2025/may/13/uk-wage-growth-slows-payrolls-vacancies-drop-thames-water-mps-us-inflation-business-live-news

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

Wage growth across the UK has slowed, and the number of people on payrolls has fallen, as Britain’s jobs market continues to cool.

The latest UK labour market data, just released, shows that average regular earnings (excluding bonuses) rose by 5.6% in January to March 2025, down from 5.9% in the previous quarter.

Growth in pay including bonuses also slowed – it rose by 5.5% in January-March, down from 5.7% in the final three months of 2024.

Although wages growth slowed, earnings are still rising faster than prices in the shops. Once you adjust for inflation, pay (both regular and total) rose by 2.6% per year on both measures.

Minister for Employment,Alison McGovernhas said:

But, today’s report also shows a drop in demand for workers, as UK companies adjust to the increase in the minimum wage, and higher national insurance contributions, which kicked in at the start of April.

TheOfficeforNationalStatisticsreports that the number of payrolled employees felled by 33,000 in April, following a 47,000 drop in March.

On an annual basis, there were 106,000 fewer payrolled employees in April than a year ago, the ONS estimates.

In another sign that firms are being cautious, the number of vacancies in the UK fell by 42,000 in the January-March quarter, the 34th consecutive quarterly decline in a row. The biggest fall came in the construction sector

ONSdirector of economic statisticsLiz McKeownsays:

7am BST: UK labour market report

10am BST: ZEW survey of eurozone economic confidence

10am BST: Environment, Food and Rural Affairs Committee (EFRA) to quiz the CEO, CFO and Chair of Thames Water

1.30pm BST: US inflation report for April

The increased cost of hiring workers in the UK is continuing to dampen the job market, according to the Institute of Directors.

Alex Hall-Chen, Principal Policy Advisor for Employment at theInstituteofDirectors, says:

Economists are concerned that the UK’s jobs market appears to have cooled in recent months, judging bytoday’s labour statistics.

Suren Thiru,ICAEWeconomics director, fears the employment market is cooling, saying:

Paige Tao, economist atPwC UK,suggests the weakening jobs market could spur the Bank of England towards further interest rate cuts:

Lindsay James, investment strategist atQuilter, fear today’s jobs report may be “the start of the expected slowdown”, adding:

The UK’s unemployment rate has risen to its highest in almost four years, today’s labour market data shows.

At 4.5% in January-March, the jobless rate for those aged 16 and over was the highest since June-August 2021, when it was also recorded at 4.5%.

Nicholas Hyett, investment manager atWealth Club,says:

Here are more key facts from this morning’s jobs report:

The UK employment rate for people aged 16 to 64 years was estimated at 75.0% in January to March 2025. This is above estimates of a year ago, but largely unchanged in the latest quarter.

The UK unemployment rate for people aged 16 years and over was estimated at 4.5% in January to March 2025. This is above estimates of a year ago, and up in the latest quarter.

The UK economic inactivity rate for people aged 16 to 64 years was estimated at 21.4% in January to March 2025. This is below estimates of a year ago, and down in the latest quarter.