Employers have cut annual pay increases and pared back hiring in recent months as the economic slowdown took its toll on the jobs market.<\/p>\n
Data from the Office for National Statistics<\/a> (ONS), released on Tuesday, showed that UK unemployment edged higher in the three months to June but the official jobless rate was unchanged at 4.7%, a four-year high.<\/p>\n Pay growth including bonuses dropped from 5% to 4.6% over the same period. However, stripping out one-off awards, pay growth remained at 5%, suggesting employers had cut back on incentives.<\/p>\n Giving a strong indication of employers\u2019 reluctance to hire new staff, the vacancy rate fell by 44,000. The drop of more than 5% in the three months to June on the previous quarter was the 37th consecutive fall in vacancies and took the total to well below pre-pandemic levels at 718,000.<\/p>\n The ONS said its research \u201csuggests some firms may not be recruiting new workers or replacing workers who have left\u201d.<\/p>\n Rachel Reeves conceded that the government had \u201cmore to do\u201d but defended her stewardship of the economy. During a visit to Belfast on Tuesday, the chancellor said Labour had been \u201ccreating more jobs\u201d since entering office.<\/p>\n \u201cThe most important figure today is that there are 384,000 more people in work than when I became chancellor,\u201d she said. \u201cEverybody who can work should be in work, and as a government, we\u2019re committed to helping more people back to work. There are huge opportunities in our economy.\u201d<\/p>\n Last month, data showed the unemployment rate had risen to 4.7% in the three months to May<\/a>, while pay growth slipped from 5.3% to 5%.<\/p>\n Suren Thiru, economics director at the accountancy body, the ICAEW, said the rise in employer national insurance in April was still taking a toll on firms hiring new staff.<\/p>\n \u201cThe UK jobs market is facing more pain in the coming months with higher labour costs likely to lift unemployment moderately higher, particularly given growing concerns over more tax rises in this autumn\u2019s budget,\u201d he said.<\/p>\n The figures supported the Bank of England\u2019s view that the jobs market and pay growth were weakening, he said, but was unlikely to bring forward further interest rate cuts after a quarter-point cut to 4% last week<\/a>.<\/p>\n \u201cWhile these disheartening figures will reassure rate-setters that last week\u2019s policy loosening was the right call, the pace at which the labour market is currently cooling is unlikely to be sufficient to prompt another rate cut in September,\u201d he added.<\/p>\n Financial markets had expected unemployment to remain steady at 4.7% and for the rise in average earnings, including bonuses, to slow, from 5% to 4.7%.<\/p>\n The finance and business services sector, which pays out more in bonuses than other industries, had the lowest annual regular growth rate, at 3.1%.<\/p>\n Recent surveys have shown businesses reducing the number of job postings as they grapple with rising employment costs<\/a> and worry about the economic outlook.<\/p>\n skip past newsletter promotion<\/a><\/p>\n Sign up to Business Today<\/p>\n Get set for the working day \u2013 we’ll point you to all the business news and analysis you need every morning<\/p>\n Privacy Notice: Newsletters may contain information about charities, online ads, and content funded by outside parties. If you do not have an account, we will create a guest account for you on theguardian.com<\/a> to send you this newsletter. You can complete full registration at any time. For more information about how we use your data see our Privacy Policy<\/a>. We use Google reCaptcha to protect our website and the Google Privacy Policy<\/a> and Terms of Service<\/a> apply.<\/p>\n after newsletter promotion<\/p>\n The Chartered Institute of Personnel and Development said on Monday that hiring intentions among Britain\u2019s businesses remain at a record low<\/a>, with young people hit hardest by the drop in recruitment.<\/p>\n