UK Labor Market Tightness Eases As Job Vacancies Fall

The UK labor market turned less tight in the middle of the year as job vacancies declined for the first time since August 2020 and the unemployment rate remained unchanged, the latest Labor Force Survey from the Office for National Statistics showed Tuesday.

The number of job vacancies showed its first quarterly fall since June to August 2020. Job vacancies totaled 1.274 million, a decrease of 19,800 from the previous quarter.

The jobless rate came in at 3.8 percent in the second quarter, the same rate as seen in three months to May and in line with expectations. However, this was up by 0.1 percentage points from the first quarter.

The number of employed persons increased 160,000 from the previous quarter. The jobless rate was 75.5 percent, down 0.1 percentage points on the quarter.

The average earnings of employees including bonuses grew 5.1 percent from the last year. Excluding bonuses, earnings advanced 4.7 percent. Both total and regular pay were forecast to climb 4.5 percent each.

Payrolled employees increased by 73,000 from June to a record 29.7 million in July, data showed.

In July, jobless claims declined by 10,500 from the previous month, but less than economists’ forecast of 32,000. The claimant count remained unchanged at 3.9 percent.

In a separate communiqué, the ONS said output per hour worked remained flat in the second quarter, following a 0.6 percent fall in the first quarter.

Output per hour worked in the second quarter was 1.7 percent above its pre-coronavirus pandemic level.

Although labor market figures revealed further evidence that the weaker economy is leading to a slightly less tight labor market, by any metric the labor market is still very tight, Capital Economics economist Ruth Gregory said.

The economist said the robust rise in employment in June together with the acceleration in wage growth will heap pressure on the Bank of England to raise interest rates by 50 basis points rather than 25 basis points at the next policy meeting on September 15.

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