Unemployment rate unchanged but signs point to cooling jobs market

The UK jobless rate remained unchanged in the latest three months amid mounting signs that Britain’s jobs market has cooled.

Estimates from the Office for National Statistics (ONS) revealed that the unemployment rate for those aged 16 and over was 4.2% in the three months to August, the same as in the previous three months.

It comes after official figures last week revealed that real earnings are outstripping inflation for the first time in nearly two years.

But there was also a mixed picture for the wider jobs market after last week’s figures showed pay growth starting to ease back for the first time since January, job vacancies falling for the 15th time in a row and an 11,000 drop in UK workers on payrolls during September.

Jake Finney, economist at PwC UK, said: "The UK labour market remains tight but is cooling, with unemployment rising, vacancies declining, and pay growth slowing."

The inactivity rate among those aged 16-64 also remained unchanged at 20.9%, according to the ONS.

The latest "experimental" figures had been delayed by a week due to a low response to its labour force survey, and the ONS said it has used extra data sources to estimate the figures, including more real-time payroll data.

The ONS said this provides a more "holistic view" of the labour market while the traditional survey statistics are uncertain.

Darren Morgan, ONS director of economic statistics, said: "This is part of our transformation of the way we measure the labour market where we are introducing an improved Labour Force Survey, asking more people in different ways about their employment status."

The data also showed that 119,000 working days were lost to industrial disputes in August, with the majority of the strikes in the health and social work sector.

Revised figures from the ONS also revealed wages have been out-pacing inflation since the three months to July. It means wages are rising faster than prices for the first time since October 2021.

However, earnings growth eased back from 7.9% in the three months to July in a sign that firms are starting to hold back on wage hikes.