UK unemployment rate falls to 4.9% - but number of vacancies continues to drop too

UK unemployment rate falls to 4.9% - but number of vacancies continues to drop too Figures for the UK jobs market show a mixed picture, with the unemployment rate falling to 4.9%, in a boost to the government but it's getting harder to get a job The UK’s unemployment rate has fallen to 4.9%, the Office for the National Statistics has confirmed. The figure for February to April marked a drop from 5% in the first three months of the year, with the number of people aged 16 and over down from 1.8million to 1.76million. The welcome decline came despite the number of people claiming out of work benefits rising in May. And the estimated number of job vacancies continued to fall, down another 19,000 to 707,000 and the lowest number of openings since April 2021. Meanwhile, average wage growth remained steady at 3.4% between February and April, or 4.4% including those who got a bonus. It meant, for a typical worker, their pay is rising roughly in line or just above inflation. The mixed picture on the state of the UK labour market came as voters went to the polls in the Makerfield byelection. The data comes as the Bank of England votes later today on whether to change its base rate from 3.75%. Most economists think it will keep the rate on hold. ONS Director of Economic Statistics Liz McKeown said: “The labour market remained broadly stable in the latest quarter, with further softening evident in some measures. Payroll numbers continued to fall over this period, with new recruits at their lowest level in five years. However, overall employment was little changed, with some signs of workers moving into self‑employment. “Vacancies also continued to fall, further suggesting that firms are becoming more cautious about taking on new staff. The decline has been most persistent among lower‑paying sectors and smaller employers, although the largest fall this quarter was in professional services. “Meanwhile, regular wage growth in the private sector slowed to its lowest rate in five and a half years, though total earnings are growing faster because bonus payments in March and April are higher than a year ago, particularly in the financial sector. Public sector pay growth increased but is once again affected by the timing of pay awards varying this year.” Thomas Pugh, chief economist at audit, tax and consulting firm RSM UK, said: “There is no chance of a rate hike this afternoon, and interest rates will most likely stay where they are for the rest of this year. Meanwhile, stagnant real wage growth in the second half of the year will set a significant challenge for whoever is in Downing Street. "However, looking ahead, the unemployment rate will most likely continue to gradually climb through the summer as the full impact of the surge in input costs, tighter financing and higher uncertainty weighs on hiring appetite. We expect a peak of 5.3%. What’s more, wage growth in the 3% - 3.5% range means that even with lower oil prices, real wages are likely to stagnate in the second half of this year." Patrick Milnes, head of policy for people and work at the British Chambers of Commerce, said: “While unemployment fell slightly to 4.9%, the expectation is that it will rise as businesses remain cautious about hiring. Our latest forecast suggests it could reach 5.2% by Christmas as firms struggle with labour cost pressures. “With vacancies falling and a rise in economic inactivity, this would suggest many businesses are pressing pause on recruitment as uncertainty looms around costs, global headwinds and domestic policies."