UK Jobs: Mixed Signals
UK Unemployment Holds Steady at 4.9%, But Payrolls Fall as Wage Growth Persists
Key Points
The ONS estimates show payrolled employees fell by 78,000 year-on-year between June 2025 and June 2026, with early July data suggesting a further 94,000 year-on-year drop to around 30.3 million.
Unemployment declined by 36,000 to 1.772 million, but remained up by about 88,000 from a year earlier, driven by more people unemployed for six to 12 months.
Youth unemployment remains a concern at around 15%, with the CIPD survey indicating employer hiring confidence near its weakest levels outside the Covid-19 period and calls for policies to bolster apprenticeships and technical training.
Currency markets showed a modest reaction to the data, with GBP/USD trading around 1.3524 as traders weighed persistent wage pressures against weak vacancies.
Real earnings, after adjusting for inflation, rose about 0.7% year on year, adding context to the nominal 3.5% (ex bonuses) / 4.1% (including bonuses) wage figures.
The UK unemployment rate held steady at 4.9% in the three months to June, Office for National Statistics data showed, missing economists' expectations of a dip to 4.8%. The flat reading is a setback for Prime Minister Andy Burnham, who had hoped for signs of improvement in the jobs market, This Is Money reported.
Pay growth remained strong. Average earnings excluding bonuses rose 3.5% year-on-year. Including bonuses, that figure climbed to 4.1%. But after adjusting for inflation, real earnings grew just 0.7% — a much smaller gain in real terms.
Payroll Numbers Keep Falling Despite Flat Headline Rate
The headline unemployment rate can hide a lot. Payrolled employees — workers on company payrolls — fell by 78,000 year-on-year between June 2025 and June 2026, according to Action Forex. Early July data made things look worse, pointing to a further year-on-year drop of 94,000, putting total payrolled workers at around 30.3 million.
The number of unemployed people actually fell by 36,000 to 1.772 million in the latest period. But that total is still about 88,000 higher than a year ago, The Wall Street Journal noted. The rise is being driven by more people who have been out of work for six to 12 months — a sign that joblessness is becoming harder to escape.
Youth Unemployment Hits 15% as Hiring Confidence Crumbles
Young workers are bearing the brunt of the slowdown. Youth unemployment stands at around 15%. A CIPD survey — CIPD is the professional body for HR and people management — found employer hiring confidence near its weakest point outside the Covid-19 period.
Experts are warning that weak hiring now could hurt the economy for years. If young people can't get jobs or apprenticeships, they miss out on skills that take a long time to build. Calls are growing for government policies to boost apprenticeships and technical training before the damage becomes permanent.
Hot Wage Growth Puts Bank of England in a Tight Spot
For the Bank of England, the data sends two conflicting signals at once. Wage growth at 4.1% including bonuses is well above the level most economists consider safe for inflation. That could push the Bank to keep interest rates higher for longer.
At the same time, the jobs market clearly lacks momentum. Payrolls are shrinking. Vacancies are sparse. Rate cuts could help, but the Bank risks stoking inflation if wages keep rising. Market Screener noted the data complicates the Bank's next move considerably.
Pound Barely Moves as Markets Weigh Up Mixed Signals
Currency traders took the data in stride. The pound traded at around $1.3524 against the US dollar after the release — a modest move that reflected the mixed nature of the report. Strong wages pulled in one direction. Weak vacancies and falling payrolls pulled in the other.
Action Forex reported that investors are struggling to price in a clear direction for UK monetary policy. Until the Bank of England signals its next step more clearly, markets are likely to stay cautious on sterling. The next key test will be whether wage growth begins to cool in coming months.
Sentiment
Mostly NegativePublishers
19
Articles
31
Reach
50
