Wage growth edges back as unemployment static

The Office for National Statistics said average regular earnings, excluding bonuses, increased by 7.7 per cent in the three months to September, down from an upwardly revised and record high of 7.9 per cent in the previous three months.

The data showed that wages rose one per cent after taking Consumer Prices Index inflation into account, the highest increase in real wages since the three months to September 2021.

Britain's rate of unemployment is estimated to have remained unchanged at 4.2 per cent in the third quarter but more cracks are appearing in the jobs sector, with vacancies falling to the lowest level for more than two years, down 58,000 quarter-on-quarter at 957,000.

Across the West Midlands numbers claiming unemployment benefits, including Universal Credit, fell by 1,290 to 177,940 – 4.8 per cent of the working population.

There was a mixed picture in individual areas.

Shropshire had a fall of 75 to 4,255 (2.2 per cent) with Telford and Wrekin up 45 to 4,045 (3.5 per cent).

For Powys the claimant total was flat at 1,645 (2.2 per cent).

Louise Johnson, Partnership Manager Shropshire, Telford & Wrekin, Department for Work and Pensions, Work and Health Service, said there was lots of support available to those looking to get back in to work but doesn't know where to start.

"While Shropshire saw a reduction on the Claimant Count when compared to the previous year, Telford did see an increase," she said.

"But there was a further reduction in the number of claimants in the 50 plus age groups across the region and with the festive period here, there are further opportunities."

She added: "Now is a great time for jobseekers to give their career aspirations a kick-start. One way is to apply for some of the hundreds of Christmas jobs being advertised locally, as a stepping stone to get back into the work routine, while developing new skills and sharpening existing ones.

"With the support of their work coach jobseekers can get the help they need to take full advantage of opportunities available now. Unlocking the skills and abilities of people can improve employment prospects.

"Support is available to everyone, whatever their age, health condition or if they’re just looking to improve their career prospects. Importantly jobseeking parents on Universal Credit, can now get extra financial help through increased childcare payments."

Meanwhile, Paul Butterworth, CEO at Chambers Wales South East, South West and Mid, covering mid Wales, said: "The data shows that the labour market has remained largely unchanged in the last quarter. The UK’s unemployment rate remains at 4.2 per cent, the economic inactivity rate stayed at 20.9% and the employment rate had a minimal fall of 0.1 per cent.

“As vacancies continue to fall and the labour market shows signs of cooling off, employers are still struggling with higher cost pressures due to wages rising quicker than inflation and the ongoing skills shortage.

“67 per cent of businesses in Wales stated in our Quarterly Economic Survey for quarter three that their business was under pressure to raise its prices because of labour costs. A third of Welsh businesses reported that they are currently struggling with wage inflation stifling growth and over a quarter cited wage inflation as the biggest barrier to growth for their business in relation to skills.

“Skills shortages and a hesitancy to invest in training opportunities due to cost pressures can inhibit businesses’ plans for growth. Policymakers need to understand the challenges businesses in Wales are facing and do more to help businesses invest in training and upskilling opportunities to attract and retain employees.”

Darren Morgan, ONS director of economic statistics, said: "Our labour market figures show a largely unchanged picture, with the proportions of people who are employed, unemployed or who are neither working nor looking for a job all little changed on the previous quarter.

"The number of job vacancies fell for the 16th straight month. Nevertheless, vacancies still remain well above their pre-pandemic levels. With inflation easing in the latest quarter, real pay is now growing at its fastest rate for two years."

More real-time data showed that the number of UK workers on payrolls rose by 33,000 – or 0.1 per cent – between September and October to 30.2 million, although the ONS cautioned this was subject to revision.

It revised the payroll data for September to a month-on-month rise of 32,000.

Chancellor Jeremy Hunt said: "It's heartening to see inflation falling and real wages growing, keeping more money in people's pockets."

Economists said the drop in wage growth, together with last week's official data showing a stalling economy with zero growth in the third quarter of the year, would likely persuade the Bank of England to hold off from further interest rate rises.

Policymakers at the Bank are watching wage growth intently, with the recent record highs having been a cause for concern in its battle to bring sky-high inflation back down to the two per cent target.

Rates are now widely seen as having peaked at 5.25 per cent and with the threat of recession looming large, some economists believe the Bank will move to begin cutting borrowing costs in 2024.

Jane Gratton, deputy director of public policy at the British Chambers of Commerce, said: “There are clear signs of a cooling off in the labour market, with vacancies continuing to trend downwards and unemployment remaining static.

“But employers are still struggling, as wages continue to outpace inflation and the impact of 14 consecutive interest rate rises starts to bite. It is also a concern that the flow of inactive workers back into employment appears to have stalled.

“A thriving economy needs a skilled and flexible workforce in every region and sector. That’s why the UK Government and employers need to invest now to address the skills shortages that are holding everyone back."

Michael Stull, director at ManpowerGroup UK, said: “As cost-of-living pressures combine with significant talent gaps, wage growth at 7.7 per cent in the quarter to September 2023 remains high and continues to be a keen area of focus for employers and candidates alike. Our advice to organisations who are facing this perfect storm of high inflation, skills shortages and economic stagnation, is to think carefully before making pay increases. While uncertainty remains so prevalent, our recommendation is to look instead at ways to retain existing staff by bolstering benefits packages and by offering opportunities to upskill and reskill, especially across the areas where talent shortages prevail."