UK jobs creation slows as pay growth reaches 11-year high

Hiring eases in three months to July, showing stress placed on economy by Brexit


The first cracks have begun to emerge in Britain’s resilient labour market as job creation slowed over the summer months, in a sign of the stress facing the UK economy as Brexit looms.


Despite wage growth hitting its highest level in more than a decade, the Office for National Statistics said hiring had eased in the three months to July, as companies and public sector employers took on 31,000 more workers – below the forecasts of City economists.


In a sign of growing caution among employers as the world economy slows and as Westminster descends into turmoil over Brexit, the number of job vacancies fell to 812,000, the lowest level since the end of 2017.


The ONS said the number of job adverts posted by companies had been falling in consecutive months since earlier this year, ending a period of steady growth that began in 2012.


The signs of cooler conditions in the jobs market come despite annual wage rises, including bonuses, hitting 4% on average, the fastest wage growth in 11 years. Pay growth excluding bonuses eased slightly to 3.8%.


Despite faster recent pay rises, the average worker in Britain still earns less than they did a decade ago after inflation. An average total pay packet is worth £502 per week, compared with a peak of £525 in February 2008.


Unemployment fell back slightly to the lowest level since the mid-1970s, falling to 3.8% in the period.


John Philpott, director of the Jobs Economist consultancy, said there was a near standstill in private sector job creation, accounting for only 2,000 of the 31,000 additional people in work. Public sector jobs, mostly in the NHS and education, were the prime source of continued market buoyancy.


“These latest figures confirm recent signs of softening in the UK labour market. Recruitment appears to have weakened most noticeably in smaller private sector businesses, though it is unclear to what extent this reflects prolonged uncertainty over Brexit or a broader slowdown in the economy,” he said.


Jobs growth has been driven in recent years by rising numbers of women in work, as well as rapid increases in older workers staying in their role longer. The ONS said changes in the state pension age for women had resulted in fewer retiring between the age of 60 and 65.