The UK unemployment rate for January to March 2024 (4.3 percent) is above estimates of a year ago (January to March 2023), and increased in the latest quarter.
Annual growth in employees’ average regular earnings (excluding bonuses) in Great Britain was 6.0 percent in January to March 2024, and annual growth in total earnings (including bonuses) was 5.7 percent, according to the latest figures from the ONS.
Annual growth in real terms (adjusted for inflation using the Consumer Prices Index including owner occupiers’ housing costs (CPIH) for regular pay was 2.0 percent in January to March 2024, and for total pay was 1.7 percent.
In February to April 2024, the estimated number of vacancies in the UK decreased by 26,000 on the quarter to 898,000.
Vacancies decreased on the quarter for the 22nd consecutive period but are still above pre-coronavirus (COVID-19) pandemic levels.
Alice Haine, Personal Finance Analyst at Bestinvest by Evelyn Partners, the wealth manager, said: “Wage growth has been easing since the summer of last year with this pause in the downward journey coming at a time when inflation is falling more dramatically.
“In real terms, regular salaries jumped 2 percent and total pay 1.7 percent once inflation is accounted for meaning incomes are comfortably outstripping price rises.
“With pay packets stretching much further than they did a year ago, household budgets may feel slightly more comfortable with the prospect of an imminent rate cut delivering another boost to consumer finances after a challenging couple of years.
“The likelihood of a summer rate cut, with many consumers pinning their hopes on a move as early next month, may be slightly dented by the better-than-expected pay growth data.”
Miss Haine continued: “The UK economy has already recovered from the technical recession it entered in the latter half of last year with a better-than-expected expansion in Q1 of 0.6 percent.
“While an economy that’s ‘going gangbusters’ offers reassurance to workers worried about job security, some businesses may still be looking to rein in costs to protect profits as they analyse the fallout from a difficult couple of years. This means redundancies are not off the table yet.
“Hiring remains muted with vacancies dropping for the 22nd time to under 900,000 amid continued hesitancy among companies around recruiting extra staff.
“Job uncertainty can be very unsettling for workers, particularly those with no backup savings in place. The financial implications for those that cannot secure a new job quickly can be severe with the longer they are unemployed raising the prospect of bills remaining unpaid and debts piling up.
“Building up solid financial reserves that can cover up to six months’ of expenses is important in uncertain times. Paying down expensive debts and avoiding unnecessary expenditure will also ease any fears around being able to cover a lengthy period without income. Better to be prepared for all eventualities than to be caught short.”
Sarah Coles, head of personal finance, Hargreaves Lansdown said: “The jobs market is horribly divided, and the gaps are growing.
“On the one side are those in secure jobs, in the manufacturing and finance and business services sectors, who are sitting pretty with wages up 6.8 percent and March bonuses burning a hole in their pockets.
“On the other are the rising numbers of people losing their job, and those in the construction sector, facing pay rises of just 2.6 percent – way below inflation. There’s nothing burning a hole in their pocket – because there’s a growing risk of having nothing in their pockets at all.
“The jobs flows data shows movement from employment into unemployment and inactivity, and a move from inactivity to unemployment. As a result, unemployment has risen for those unemployed over every period – up to six months, 6-12 months and over 12 months.
“It means we all need to seriously consider what we would do if we lost work – especially if you’re currently enjoying strong pay rises, and even a bonus.”