According to the latest figures from the Office for National Statistics (ONS), UK wage growth slowed down in the three months to September.
The figures also showed the biggest annual drop in the number of job vacancies in nearly 10 years – it was the ninth consecutive monthly fall in available work, with advertised positions dropping by 18,000 to 800,000.
During this three-month period, there were 32,75 million people in work, a fall of 58,000. This was the biggest drop since May 2015, when the total fell by 65,000.
In response, the ONS said that the collapse of several store chains and the implementation of shop closure programmes was the reason behind the falling numbers.
On a positive note, unemployment dropped by 23,000 to 1.31 million over the same period. Average earnings excluding bonuses also increased by 3.6%, compared with 3.8% growth in the previous month.
“The employment rate is higher than a year ago, though broadly unchanged in recent months. Vacancies have seen their biggest annual fall since late 2009, but remain high by historical standards,” said an ONS spokesperson.
“The number of EU nationals in work was very little changed on the year, with almost all the growth in overseas workers coming from non-EU nationals.”
What a slow down in wage growth means for the UK
The ONS figures come after the recent news that the UK’s economy had grown at the slowest annual rate in almost a decade. Year-on-year growth in the three months to end-September 2019 slowed to 1% from 1.3% in the second quarter.
Despite the economy expanding by 0.3% in the third quarter, it was not as fast as the 0.4% forecast by economists, including at the Bank of England.
For Samuel Tombs, economist at Pantheon Macroeconomics, the latest ONS figures were an indication that interest rates would stay unchanged for the foreseeable future.
“The pace of weakening in the labour market remains gradual enough for the Monetary Policy Committee to hold back from cutting bank rate over the coming months,” he said.
Can roller coaster employment figures be trusted?
Because estimates of employment are based on a survey, they come with a margin of error. Furthermore, the ONS says that changes smaller than 150,000 people aren’t a concern.
Having said that, every monthly change in the unemployment rate has been smaller than the margin of error for ten years. So, its necessary to look at unemployment figures alongside other measures such as wages and job vacancies. Only then can judgements be made about the state of the UK’s economy.
IHS Markit economist Chris Williamson said the falling numbers of working people and job vacancies showed data “was falling into line with earlier warning signs of a weakening labour market from the surveys”.
Andrew Wishart, UK economist at Capital Economics, added: “Overall, the figures appear to illustrate that demand for labour is easing, but no sharp downturn, which is a relief following disappointing GDP growth in the third quarter.”