Anaemic economic growth, rising inflation, and a worsening outlook in the jobs market. If the inheritance from the Conservatives had been bad, the situation a year in to the new Labour government do not look much better.<\/p>\n
The latest figures show unemployment nudged up to 4.7% in May<\/a>, hitting the highest level in four years, while wage growth slowed for a third consecutive month, and employers cut back on hiring.<\/p>\n Given the cocktail of economic concerns facing Britain, a slowdown in the labour market is hardly surprising. Employers are facing higher costs from inflation, tax rises and elevated interest rates; squeezed consumers are not rushing to spend, and Donald Trump\u2019s trade wars are clouding the outlook.<\/p>\n However, it would be remiss to describe the slowdown in the jobs market as a capitulation. Despite the clear pressures, wage growth remains surprisingly resilient and redundancy rates, although elevated, are not rocketing.<\/p>\n \u201cFrom our perspective it is holding quite steady given the circumstances,\u201d said Michael Stull, managing director at the recruitment firm ManpowerGroup UK. \u201cEven with the UK\u2019s inflation rise and negative economic growth, there are signs of returning confidence.\u201d<\/p>\n Business groups have complained since Rachel Reeves\u2019s autumn budget that her \u00a325bn increase in employer national insurance contributions<\/a> (NICs) and 6.7% rise in the \u201cnational living wage\u201d would force them to cut jobs and raise prices for consumers.<\/p>\n Bosses often play up such concerns to gain a lobbying advantage. But on this occasion, the evidence would suggest a clear impact from the chancellor\u2019s tax raising measures. Figures released on Wednesday showed inflation rose by more than expected<\/a> in June as firms passed on higher employment costs to the price of restaurant meals, hotel stays and supermarket groceries.<\/p>\n The latest figures showing a 41,000 fall in the number of workers on company payrolls in June are also a worry. Job vacancies are falling most in the sectors most exposed to higher costs, including hospitality and retail. There are also concerns that firms are employing artificial intelligence<\/a> rather than hiring real humans.<\/p>\n However, within the labour market data there are conflicting messages. Both unemployment and employment rose at the same time. This is partly down to more people moving out of economic inactivity<\/a> \u2013 when working-age adults are neither employer or looking for work.<\/p>\n But there are also serious questions over the reliability of the data, given the well-documented troubles at the Office for National Statistics<\/a>. To read the 7am labour market release is to be served a dog\u2019s breakfast without a plate or cutlery; full of caveats about revisions, poor data collection and volatility. A clear direction of travel does, however, emerge when piecing together a wide range of data sources.<\/p>\n Despite the cooling jobs market, workers are still getting reasonably robust pay settlements. Annual growth in total pay, at 5%, might be lower than in recent months, but is well above inflation and far-stronger than anything seen in the 2010s.<\/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 info about charities, online ads, and content funded by outside parties. For more information 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