The UK unemployment rate was estimated at 3.6 per cent which is up from 3.5 per cent in August. There was a fall of 52,000 in employment, which was ahead of analysts’ predictions.
Elsewhere, the UK economic inactivity rate was estimated at 21.6 per cent, which is 0.2 percentage points higher than the previous three months period.
‘Easing of labour demand’
Ashley Webb, UK economist at Capital Economics, said: “September’s labour market figures reveal further signs that the labour market is becoming less tight. That may alleviate some of the pressure on the Bank of England to repeat November’s 75 basis point increase at the next policy meeting on 15 December.
“The 52,000 fall in employment in the three months to September was much larger than the analyst consensus of -25,000 and is another sign of easing of labour demand.
“And despite a further 108,000 rise in inactivity, the unemployment rate rose from 3.5 per cent in August to 3.6 per cnt in September. While the number of single-month job vacancies rose by 57,000 in October, the three-month average continues to trend downwards. So on both of these measures, the labour market is not quite as tight as it was a few months ago.”
Webb added that given today’s data, it thinks the Bank of England will raise interest rates by 50 basis points in December (to 3.5 per cent), and will eventually peak at 5 per cent.
Wages rise but inflation crushes spending power
Meanwhile, separate ONS figures reveal that growth in average total pay which includes bonuses was 6 per cent, while regular pay which excludes bonuses was 5.7 per cent between July and September 2022.
However, despite regular pay seeing the strongest growth outside of the Covid pandemic period, once inflation is factored in, workers have seen wages fall in real terms.
The ONS revealed that total pay fell 2.6 per cent while regular pay fell 2.7 per cent. This is slightly smaller than the record fall in real regular pay seen between April to June 2022, “but still remains among the largest falls in growth since comparable records began in 2001”, it noted.
‘Employers need to be flexible
Danni Hewson, financial analyst at AJ Bell, said: “Wages are rising and the three months to September delivered the ‘strongest growth in regular pay’ since the pandemic. But 5.7% doesn’t cut it in today’s uber inflationary environment and real pay fell by 2.7%. Hard work is paying less every month and life is becoming just that little bit harder.
Others noted that, despite the slight rise in unemployment and the real-term fall in wages, the labour market had not switched back completely in favour of employers, who needed to remain flexible when recruiting staff.
Marcus Nanson, managing director at mortgage sector-focused NRG Resourcing said: “No one knows how long and deep the recession the Bank of England is predicting will be and that’s creating a tangible uncertainty among employers. It’s slowly but surely changing from an employee to an employer market again.
“However, with different opportunities available to people post-Covid, I don’t believe it will ever be a completely “get what you’re given” jobs market again.
“Real terms pay is being hit hard but companies who provide flexible working, which saves on commuting and other costs, can go some way to help address this. As the cost of living soars, flexibility is a great perk that works well for businesses that can function well with it.”
