Payrolled employees fell 85,000 over the year to May and slipped again in June’s flash to 30.3 million. Unemployment held at 4.9%, vacancies fell to 712,000, and pay growth still edges inflation — but now mostly on the public payroll’s account.
Key Points
Why This Matters
Strip out the survey noise and the direction is clear. On the employee measure the ONS currently regards as most reliable — HMRC’s payroll records — payrolled numbers are lower than a year ago. Falling vacancies and shrinking payrolls are the early signals; rising unemployment is the lagging one. The market is cooling before it cracks.
The pay split matters more than the level. Private regular pay growth is now below 3% while public runs at 5.5%. That is a fiscal problem dressed as a monetary one — the fastest regular pay growth of the broad ONS sectors, partly inflated by the timing of NHS awards, paid by the taxpayer as private demand for labour weakens.
What This Means for the Economy
For the MPC the figures are dovish at the margin: shrinking payrolls, falling vacancies and private regular pay below 3% reduce the case for further tightening. But renewed oil-price pressure complicates the near-term decision, raising headline inflation even as domestic wage pressure subsides. With Brent back around $91 and the MPC deciding on 30 July, the near-term call is a hold, not a cut. For the Treasury it is worse: a shrinking PAYE employment base puts pressure on receipts, just as public-sector regular pay growth has risen to 5.5% and the provisional Claimant Count stands at 1.689 million. The automatic stabilisers are beginning to lean against the Chancellor.