The UK’s jobs market has shown further signs of cooling after a rise in unemployment in September while pay growth slowed.
Figures from the Office for National Statistics (ONS) show the rate of unemployment rose to 4.3% in the three months to September, up from 4% the previous quarter.
While the ONS warned its jobs market figures should be treated with caution amid data collection issues, there were broader signs of a slowdown from separate figures showing the number of employees on company payrolls fell by 9,000 over the quarter. Vacancies also fell for a 28th consecutive month to the lowest level since May 2021.
The government has come under pressure from businesses after outlining tax increases in the budget, including a rise in employer national insurance contributions (NICs) that bosses have said could lead to job cuts.
Asda and Sainsbury’s last week said the tax rise would cost them £100m and £140m respectively as they warned they could pass these costs on in the form of higher prices, while Tesco faces a £1bn increase in its national insurance bill this parliament.
Highlighting a further slowdown in the jobs market, annual growth in employees’ average regular earnings, excluding bonuses, in Great Britain eased to 4.8% in the three months to September, down from 4.9% in the three months to August.
However, the rate of pay growth remains significantly above inflation, which dropped to 1.7% in September, helping households to rebuild their finances after the biggest hit to living standards in decades.
Pay growth including bonuses also rose from 3.8% to 4.3%, although this was largely due to one-off civil service payments.
Matthew Percival, of the CBI lobby group, said: “The labour market continues to split with signs of employers’ weakening intentions to hire at the same time as a welcome fall in inactivity.
“These figures come against a backdrop of rising concern about spiralling employment costs which are set to increase following last month’s NICs rise, the employment rights bill and the latest increase in the national living wage.”
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Liz Kendall, the work and pensions secretary, said that while it was encouraging to see real pay growth, “more needs to be done to improve living standards”, which is why the increase in the living wage was important.
She added: “2.8 million people – a near record number – are locked out of work due to poor health. This is bad for people, bad for businesses and it’s holding our economy back.
“That’s why our Get Britain Working plan will bring forward the biggest reforms to employment support in a generation, backed by an additional £240m of investment.”