- Unemployment holds firm at 4.9% in the three months to July
- Number of payrolled employees fell by 19,000 between June and July, with the retail and hospitality sectors remaining under pressure
- Vacancy numbers down to fresh five year low, but rate of fall continues to slow
Danni Hewson, AJ Bell head of financial analysis, comments on the latest UK jobs data:
“Resilient is a word that has been used to describe the UK economy a lot this year, and looking at the latest jobs data there will be relief in the government that the unemployment rate has held steady over the three months to July.
“But smaller firms are still struggling to deal with the slew of increased costs that have been heaped on them by the previous chancellor and that’s impacting their ability to take on additional staff, even if their businesses need more employees to grow. Few people will be surprised by the data that shows the retail and hospitality sectors are still under pressure when it comes to staffing levels, and payroll numbers have continued to slump with 19,000 positions lost between June and July despite pubs in particular enjoying a World Cup boost.
“Anyone looking for a job will be acutely aware that pickings are getting slimmer, with vacancy numbers dropping to a fresh five year low. The fact that the rate of that decline has steadied in recent months will be cold comfort to anyone who has seen application after application ignored.
“Average earnings growth has fallen to 3.9% from 4.2% in the previous three-month period, a figure which will draw plenty of headlines as it is likely to be the rate at which the state pension increases next April.
“For the Bank of England, it will play into the decision on whether interest rates need to rise in the near term. Market expectation of a hike later this week fell back to 33%, down from around 40% yesterday as markets assessed the potential impact on inflation of the hike in the price of oil.
“The last piece of the puzzle is expected to fall into place tomorrow when the latest inflation data is published. Though it is broadly expected to rise above 3%, well above the Bank’s target, MPC members are projected to hold fire this month, while the US Federal Reserve seems more likely to make a move.
“Today’s unemployment data does show resilience, but that resilience is expected to be tested in the coming months as Budget speculation permeates the psyche of businesses and consumers alike. Getting the messaging right in the run up to 28 October could be almost as important as what John Healey announces in the Budget itself.”
