UK average wages grew less than expected in the latest labour market data from the Office of National Statistics, which showed unemployment remained at 4.4% for the three months to February and the numbers of vacancies fell back to pre-Covid levels.
Average weekly wages grew 5.6% year-on-year in the three months to February, down from 5.8% in the previous release and lower than the average forecast from economists of 5.7%.
Weekly pay excluding bonuses was up 5.9%, the same as the previous release but lower than the 6% expected.
Private sector earnings ex-bonuses were up 5.9%.
"Regular pay growth remains strong, having increased slightly in the latest period," said ONS director of economic statistics, Liz McKeown.
"Growth accelerated in the public sector as previous pay rises fully fed through to our headline figures, while pay in the private sector was little changed."
Alongside the unemployment rate remaining unchanged at 4.4%, the number of employees on payroll fell slightly over the same period.
There were 781,000 job vacancies in January to March 2025, down 26,000 on the quarter and below pre-Covid levels for the first time since spring 2021.
A more timely measure of employment showed the first fall in the annual growth rate since April 2021 also, with HMRC PAYE data provided to the ONS showing a 78k fall in March, meaning the annual growth rate moved from +0.1% to -0.2%.
Jobs market 'showing little sign of damage'
Looking back to last month, the ONS data is "a snapshot taken in the china shop before the tariff bull was let loose", said Sarah Coles at Hargreaves Lansdown.
The jobs market was "showing little sign of damage" ahead of changes in the domestic scene too, said economist James Smith at ING, with the data reflecting the month ahead of the increases to employers' National Insurance contributions and minimum wage rates that came into force at the start of April.
Smith noted that separate weekly government data on redundancies had not increased. "That could change, though we would have expected to see some pressure emerge ahead of the employer national insurance hike earlier in April."
He said his working assumption, for now, "is that the jobs market continues to cool this year, but that we don’t see a material spike in joblessness. And for the Bank of England, that keeps all the focus on wage growth."
Pay growth is not really abating, he noted, adding that the rise in the National Living Wage will "keep pay growth supported through the spring" but he predicted wage growth will lower through the year, "but only very gradually".
"That doesn’t mean the Bank of England can’t keep cutting rates, however," with inflation data tomorrow and heightened concerns about the global economy keeping the BoE on its current pattern of gradual rate cuts once per quarter, Smith said, predicting the next cut in May and two more in the second half of the year.
Today's ONS data showed the jobs market "softened further," says Ashley Webb at Capital Economics, but offered "few signs of this feeding through to slower wage growth".
Webb said the more uncertain backdrop from US tariffs chaos could soon become a bigger drag on firms’ hiring intentions, leading pay growth could to start fading more markedly.
He noted that employment continued to cool, "but it hasn’t collapsed as the dire warnings from some business surveys suggested".
The PAYE measure of employment in March slowing from +0.1% to -0.2% was the first negative reading since April 2021, "and provides some tentative evidence that businesses started to respond to rises in business taxes and the minimum wage from this month by reducing headcount".
"Jobs growth could be hit further from the recent increase in uncertainty due to the chaotic way US tariff policy is being set."
Overall, while wage growth remains "too high", Webb reckons the Bank of England might start to become "less worried about the upside risks to inflation from pay growth and more worried about the downside risks to activity".
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