Today’s numbers show a continued weakening in the labour market.
The number of payrolled employees in July declined by 164,000 compared with a year earlier, while vacancies extended their fall.
Meanwhile, average total earnings growth slowed to 4.6% in Q2.
The continued slackening in the labour market was one of the main factors behind the Bank of England’s decision to cut rates last week, despite near-term increases in the rate of inflation.
As temporary factors dissipate, we anticipate the poorer economic conditions typified by labour market weakness to bring inflation closer to the Bank’s 2% inflation target over the course of 2026.
