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UK Wage Growth Holds at 5.9% as Job Vacancies Hit Pre-Covid Lows

Despite robust pay increases, particularly in the public sector, falling employment and vacancies highlight a cooling labor market under pressure from tax policies and global uncertainties.

Overview

  • UK wage growth remained steady at 5.9% for the three months to February, continuing to outpace inflation by approximately 3%.
  • Job vacancies fell to 781,000 in the three months to March, marking the first time they have dropped below pre-Covid levels since 2021.
  • The number of payrolled employees declined by 78,000 in March, the sharpest monthly drop since the pandemic, indicating reduced hiring activity.
  • Unemployment held steady at 4.4%, while public sector pay growth boosted overall wage figures, with private sector pay showing little change.
  • The Bank of England faces a policy challenge as strong wage growth persists, while a cooling labor market raises considerations for potential interest rate cuts.