Wage growth in the UK slowed in June, official figures show, as workers come under pressure from a renewed cost of living squeeze amid the economic impact from the Iran war.<\/p>\n
Figures from the Office for National Statistics<\/a> show average growth in total earnings, including bonuses, fell to 4.1% in the three months to June, down from 4.3% in the three months to May. City economists had forecast a larger fall to 4%.<\/p>\n Liz McKeown, the ONS director of economic statistics, said the data showed \u201csome softening\u201d in the jobs market despite a broadly unchanged picture overall, in a potential sign of stabilisation after a sharper slowdown earlier this year.<\/p>\n \u201cRegular wage growth has remained broadly stable in recent months. However, private sector pay growth has continued to ease, while public sector pay growth remains elevated due to the timing of the latest NHS pay awards,\u201d she added.<\/p>\n Pay growth excluding bonuses strengthened slightly from 3.4% to 3.5%. City economists had forecast the rate would remain unchanged. The number of workers on company payrolls fell by 13,000 in July, matching the decline in June after larger falls in previous months.<\/p>\n However, earnings growth, excluding bonuses, in the private sector slowed to 2.8%, the weakest growth rate since October 2020. Pay growth in the public sector strengthened to 6.1%, reflecting the payment of NHS staff pay rises earlier in 2026 compared to 2025, which distorts the figure.<\/p>\n Vacancies fell as small businesses warned they were facing a rise in employment costs. The headline rate of unemployment remained unchanged at 4.9%. City economists had forecast a drop to 4.8%.<\/p>\n The snapshot comes as households face a fresh hit to living standards<\/a> as the fallout from the Middle East conflict rattles the world economy. Official figures due on Wednesday are expected to show that a rise in energy bills drove UK inflation close to 3% in July.<\/p>\n Annual growth in earnings after taking account of inflation was 1.3% in the three months to June. However, workers could face a squeeze as rising inflation approaches the slowing rate of earnings growth.<\/p>\n The figures highlight the challenge for Andy Burnham\u2019s government to ease the financial pressure on households before a difficult autumn budget.<\/p>\n The new prime minister used his first week in office to announce a series of \u201cbreathing space\u201d measures to ease the cost of living, and he has promised to combat unemployment as young people bear the brunt from recent higher rates of joblessness.<\/p>\n Ministers are awaiting a review into youth jobs from Alan Milburn, the former Labour cabinet minister, after the number of 16- to 24-year-olds not in education, employment or training (Neet) surpassed a million<\/a> earlier this year for the first time in more than a decade.<\/p>\n Before a final report this autumn, Milburn told the Guardian this week that he would call on the government to \u201cturbocharge\u201d the provision of internships<\/a> for young people with special educational needs.<\/p>\n